Property chains fall apart at the worst possible moment. Ask anyone who has experienced it. Months of preparation, surveys paid for, solicitors instructed, removal vans provisionally booked. Then a phone call from your estate agent telling you that someone three properties back has changed their mind.
That is exactly what happened to our clients, a couple in their late forties who had been trying to move to a larger property in Knutsford, Cheshire for the better part of two years. They had found their dream home, agreed a price, and were two weeks from exchange when their buyer pulled out. Their existing home was not yet sold. Without a buyer, they had no funds to complete on the Knutsford property, and the vendor was not prepared to wait indefinitely.
The problem with chains
A property chain creates a situation where your ability to buy something is entirely dependent on someone else's ability to sell something else. You have no control over the people above or below you in the chain, and when one link breaks, the whole thing can unravel quickly.
In this case, the buyers had lost confidence after a survey flagged some minor structural movement on their existing home. The movement was not serious, but it was enough to make them walk away. Our clients were left with an unsold property worth around £480,000 and a purchase they desperately wanted to complete.
How a bridge loan solves the problem
A chain break bridging loan works by using the equity in your existing property as security, allowing you to complete on your new purchase before your old one has sold. Once your existing home sells, the bridge is repaid. The whole process can be set up in a matter of days if needed.
In this case, our clients had substantial equity in their existing home, which they owned outright with no mortgage. That made the security position very clean and the lender's decision straightforward.
Case at a glance
| Purchase property | Detached family home, Knutsford, Cheshire |
| Purchase price | £795,000 |
| Loan amount | £475,000 |
| Security | Existing property (owned outright, value £480,000) |
| LTV on security | 99% (first charge on existing, no charge on purchase) |
| Rate | 0.69% per month, retained interest |
| Term | 9 months |
| Time to first offer | 48 hours |
| Exit strategy | Sale of existing property |
What we arranged
Our clients called us on a Thursday morning. By Friday afternoon we had an offer in principle. The lender was comfortable taking a first charge over the existing property only and did not require a charge on the Knutsford purchase, which simplified things considerably from a legal standpoint.
Interest was retained rather than serviced monthly, which meant there were no monthly payments to worry about. The full interest cost for the nine-month term was rolled into the loan.
The valuation was carried out the following Monday. There were no complications. Solicitors worked through the week and we completed 11 days after our clients first called.
What happened to the existing property
They put the existing property back on the market immediately after completing on the Knutsford purchase. It sold subject to contract within six weeks and completed four months later. The bridging loan was repaid in full and the transaction closed cleanly.
The interest cost over the four-month period amounted to around £13,000, which our clients considered well worth paying to secure the home they had been trying to buy for two years.
Is a chain break bridge right for you?
If you are in a chain that has broken down, or you simply want to proceed with a purchase before your existing home has sold, a bridging loan can give you the freedom to do that. The key requirements are enough equity in your existing property to support the loan, a clear exit strategy (almost always the sale of the existing property), and a realistic timeframe.
If this sounds like your situation, we are happy to talk it through.