How Bridging Loans Can Help Divorce Settlements
What do Bridging loans do?
Bridging loans help you to bridge the gap while you wait for funds to be released from an asset like a home. Individuals, companies, and even large corporations use bridge loans to provide funds on short-notice notice for short periods. Bridge loans are traditionally used by individuals to secure funding for a property while waiting for an existing home to sell. It can be an excellent option for times where funds are needed but temporarily unavailable. There are however, other situations in which a property owner would need access to the equity in their property.
What are the benefits of a bridging loan for divorce?
Bridging loans can also be used to facilitate a divorce and increase chances that the dissolution of the marriage goes as smoothly and amicably as possible. The majority of legal divorce proceedings are centred around the division of assets. This can be difficult when assets need to be liquidated to be proportionately divided. This is where a bridging loan can help.
Example: A couple has agreed that it is best for them to separate, however they both want the maximum value out of their property. Rather than living together in what could be an uncomfortable environment, or selling the property quickly at a lower price, they can apply for a bridging loan. This will release equity from the property, allowing one partner to move out asap, giving both parties time to sell the house at market value or get a remortgage to keep the house permanently.
The bridging loan can limit the damage created from divorce. Keeping unhappy couples together can lead to a bad divorce and a prolonged period of unhappiness. This can create resentment and make divorce proceedings more complex than they need to be, meaning all parties lose out in more ways than one.
What are the risks with using a Bridging loan for divorce settlements?
There are 2 common concerns with all bridging loans, the first being the fees, and the second is the possibility of a no sale by the end of the term. Other complications can arise if there is a current mortgage on the property, or if there are issues with the housing market meaning the couple are stuck in negative equity. There may be concerns about eligibility for a remortgage.
Friends Capital are mortgage specialists that provide bridging loans with the best rates on the UK market. We provide unbiased financial advice to ensure all parties are fully informed of the options available to them and the pros and cons of each choice.
Apply for a bridging loan today.