Bridging loans a last resort

Tue, 29 Jan 2008

People should not take out bridging loans "unless absolutely unavoidable", one expert says.

James Molloy, product manager for AA Legal Services said that bridging loans should only be used as a last resort and then "only be used where the period is finite, i.e. after exchange."

Bridging loans should not generally be considered by people looking to prevent a property chain breaking, Mr Molloy said.

He added that if the problem of broken chains was to be tackled there would need to be legislation put in place to make a transaction legally binding earlier in the process, as was the case in Scotland .

According to the government, around one in three property transactions in England and Wales are aborted between an offer being made and the scheduled completion date.

Bridging loans allow homebuyers to "bridge" the financial gap between purchasing a new property and selling their old one.
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