Chain break

Bridging finance for a broken chain

A chain break is the classic reason ordinary homeowners and investors end up looking at bridging. Your purchase is ready and your sale is not, and a short term loan buys the time to complete one before the other.

Category: How it works

Product: Bridging Finance

Used when: Sale delayed, purchase live
Security: Existing home, new home, or both
Exit: Completion of the delayed sale
Status: Often regulated if it is your home

How the structure usually works

The loan is secured against the property you are selling, the property you are buying, or both together, and it is repaid when the sale completes. Interest is commonly rolled up so there is no monthly payment while both properties are held. Because two properties are involved, the lender is looking closely at how quickly the sale is likely to complete and at what price.

Security can sit across both properties where needed
Interest is often rolled up rather than paid monthly
The exit is the sale, evidenced by marketing and offers
Costs should be weighed against the cost of losing the purchase

Evidence lenders want on the sale

The credibility of the exit is everything. Agent valuations, the marketing history, the level of interest and any offers received all help. If the property has been on the market for a long time at an optimistic price, expect the lender to work from a more conservative figure or to want a price reduction strategy in writing.

Regulated status matters here

Where the loan is secured on a property you live in or intend to live in, different rules apply than for purely investment borrowing. Our guide on regulated versus unregulated bridging sets out the distinction, and we confirm which category your case falls into before recommending lenders.

Is it worth the cost

Short term finance is not cheap, so the honest test is what the alternative costs. Losing a purchase you have already spent money on, or accepting a reduced offer under pressure, can cost more than the finance. We set out the numbers so it is a decision rather than a leap.

Frequently asked

Can I borrow against a house I am still selling?

Yes, that is the usual structure for a chain break, with the loan repaid when the sale completes. Security can sometimes also be taken over the property you are buying.

What if my sale takes longer than expected?

Discuss it with your broker as early as possible. Some lenders will consider an extension, but that is their decision and cannot be promised at the outset.

Is chain break bridging regulated?

It depends whether the security property is your home. See our guide on regulated versus unregulated bridging for how the distinction works.

Do I need to make monthly payments?

Frequently not, because interest can be rolled up until the loan is repaid. This increases the total amount repayable.

How much can I borrow against the two properties?

That depends on valuations, the lender and the strength of the exit, so it is assessed case by case rather than set by a fixed formula.

Chain about to collapse

Call 0345 2690628 with both addresses and where the sale stands, and we will tell you what is possible.

Call 0345 2690628 Send your deal details