Bridging Loans for UAE Residents: Secure UK Property Quickly
For residents of the UAE, investing in the UK property market offers significant long-term benefits, including financial stability and potential returns.
However, when time is tight and conventional financing isn’t an option, bridging loans may provide a swift and effective solution to ensure you don’t miss out on your desired property.
What is a Bridging Loan?
A bridging loan is a short-term financial product designed to “bridge” the gap between purchasing a new property and securing long-term financing or selling an existing property.
These loans are often used for property purchases with tight deadlines, such as auction properties or developments.
Key Features of Bridging Loans:
- Short Term: Usually, terms range from 1 to 24 months.
- High Loan-to-Value (LTV): Up to 80% in some cases, depending on the property type and applicant profile.
- Flexible Repayment: Options for interest-only payments or rolling up the interest into the loan.
- Fast Access to Funds: Often processed faster than traditional mortgages, making them ideal for urgent transactions.
Why UAE Residents Consider UK Bridging Loans
The UK property market is an attractive investment destination for UAE residents and British expats living abroad.
However, navigating the UK’s ever-changing mortgage landscape can be challenging, especially when dealing with cross-border complexities.
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Common Scenarios Where Bridging Loans Are Beneficial:
- Buying Property at Auction: If you’ve successfully bid on a property, you may need funds quickly to complete the purchase.
- Refinancing Delays: Sometimes, long-term mortgages take longer to arrange, and a bridging loan can act as a temporary solution.
- Chain Breaks: If you’re waiting for your property to sell but need to secure your next home, a bridging loan fills the financial gap.
Example Scenario: A Dubai resident urgently needs to complete the purchase of a new luxury apartment in London.
With time running out, bridging loan is arranged to finalise the deal and then secured long-term mortgage financing to exit the bridge. As the mortgage process was longer due to the extra due diligence and processing required considering residency in Dubai, the bridging loan was a solution to lock in the property purchase refinancing later.
The lender would need to be comfortable that the exit strategy to an ex-pat remortgage seemed viable and may even wish to see an agreement in principle before agreeing it.
Bridging loans are not suitable for all investors so professional advice should always be taken.
Eligibility Criteria for Bridging Loans
Bridging loans are specialist products, and eligibility criteria differ from traditional mortgages. Here’s what lenders typically look for:
- Property Value: The loan amount depends on the value of the property being used as security.
- Exit Strategy: Lenders need assurance that you have a viable plan for repaying the loan, such as selling a property or refinancing with an ex-pat mortgage allowing investors that live in the UAE.
- Credit History: A good credit history can make the approval process smoother, but bespoke solutions are available for those with unique circumstances so this is not always required.
- Proof of Income: While income isn’t as scrutinised as with standard mortgages, lenders may still need proof to understand your financial profile.
The Unique Challenges for UAE Residents
UAE residents face unique hurdles when applying for UK bridging loans. Currency fluctuations, international income, and cross-border legal complexities are some of the main obstacles.
At Kerr & Watson, we can work with you to understand your challenges and speak with lenders who are willing to work with UAE-based applicants.
Key Considerations:
- Currency Risk: Lenders may apply a “haircut” to your income to account for exchange rate fluctuations.
- Proof of Wealth: If your wealth originates from international sources, providing adequate documentation is crucial. Lenders and solicitors will need to clearly understand your deposit sources.
How Kerr & Watson Can Help
At Kerr & Watson, our understanding financial transactions and the UK mortgage market allows us to secure terms for UAE residents. Here’s how we make the process straightforward:
- Whole-of-Market Access: We work with a wide range of lenders, from private banks to specialist bridging loan providers.
- Tailored Solutions: We assess your financial situation and recommend the best bridging loan product to meet your needs.
- Expert Advice: Our team stays updated with changing regulations and can guide you through every step, from application to completion.
Bridging Loans vs. Traditional Mortgages
While bridging loans and traditional mortgages both help finance property purchases, they differ significantly:
Speed: Bridging loans are generally faster to arrange than standard term mortgages if the underwriters are happy they have everything they need and the property and situation meets criteria.
Interest Rates: Bridging loans typically come with higher interest rates due to their short-term nature, with many allowing the interest to be added to the loan.
Repayment Terms: Mortgages are long-term, while bridging loans must be repaid within a short period, usually 12 months.
Why Do People Choose a Bridging Loan?
If you need funds quickly and have a solid exit strategy, a bridging loan may be an option. However, they aren’t suitable for everyone. It’s essential to speak with a knowledgeable adviser who can evaluate your situation and offer tailored guidance.
FAQs About Bridging Loans for UAE Residents
Can I get a bridging loan if I don’t have a UK credit history?
Yes, some lenders are willing to provide loans even if you lack a UK credit history, especially if you have substantial assets or income from a reliable source. The underwriter would need to be comfortable with the full situation carrying out their due diligence.
What documents will I need to provide?
Typically, you may need proof of income, deposit, identification, and details about your exit strategy. Our team can help you understand what’s required for your specific case. you can also read more on what to bring to your mortgage appointment.
How long does it take to arrange a bridging loan?
The process can take as little as week to over a month, depending on the complexity of your case and the responsiveness of all parties involved. If you are based in the UAE, needing to verify source of funds, this can slow the process down.
Conclusion
Bridging loans may be a valuable tool for UAE residents looking to secure UK property quickly.
However, they require careful planning and expert advice.
At Kerr & Watson, we pride ourselves on offering personalised mortgage and protection advice, ensuring you have the best possible experience and outcome.
Reach out to Kerr & Watson today for tailored advice and a free consultation.
