Far from a rarity, divorce is becoming more commonplace than ever before. In fact, research suggests that a full 33% of all UK marriages end in divorce. Separation is always emotionally fraught and logistically complex, but can also be surprisingly expensive.
This is particularly true in instances where one partner owes the other a significant sum of money, or where there are marital assets that cannot be divided equally. For example, the house the couple lived in together, if one of the partners wishes to retain its ownership after the other leaves.
The financial complications associated with divorce often take separating partners by surprise. Little to no specialist support is available on the High Street, but can be sourced from elsewhere from established independent lenders.
Bridging finance in particular can be useful when dividing assets and consolidating expenses, due to its flexibility and prompt accessibility.
Financial Support During a Divorce
Every separation is unique, and the financial complications of divorce differ significantly from one couple to the next. Some partners split amicably and come to agreements on asset division with no outside intervention. Elsewhere, others face the unsettling process of dividing a long list of marital assets, which in the case of tangible property and possessions often cannot be split down to the middle.
The definition of ‘marital’ assets is also somewhat open to interpretation, in terms of the proportion of any given asset that belongs to each of the partners. Legal support and even court intervention is often required, in order to determine who owns what, and how joint assets should be split.
At which point, it may become necessary for one of the partners to pay the other a large lump sum of money. This could be to ‘buy them out’ of the home they once shared, to take full ownership of a shared car, and so on.
Conventional loans and mortgages can be too complex and time-consuming to arrange for such purposes, whereas a specialist bridging loan can often be accessed within a few working days.
The Role of Divorce Loans
A divorce loan is a special type of bridging finance, issued for these exact purposes. As the name suggests, the facility is designed to ‘bridge’ urgent yet temporary financial gaps, while the borrower gets their financial situation back on track.
With divorce, one thing both partners are always in agreement on is the importance of a prompt resolution. Nobody wants separation proceedings to drag on for months, but this is often the case where financial complications prove burdensome.
Bridging finance can be used for any legal purpose, and provides borrowers with the opportunity to quickly liquidate assets for division. It can also be a useful facility for clearing debts with a former spouse, or for buying them out of jointly-owned assets.
For example, a bridging loan could be taken out against a co-owned property, at an LTV of 50%. Accessing 50% of the equity tied up in the property, the partner who will continue living there can pay off their ex-spouse, and take full ownership of their home.
This bridging loan will then accrue interest at a rate as low as 0.5% per month, giving the borrower plenty of time to consider the options available. They could sell the home to pay off the loan a few months later, or transition the bridging loan to a longer-term mortgage for flexible repayment.
The overriding point is that with bridging finance, everything can be taken care of as quickly as possible. Rather than waiting weeks (or even months) for a major bank to reach a decision on a loan or mortgage application, the funds needed to bring the matter to a swift conclusion can be accessed in a matter of days.
How Does Bridging Finance for Divorce Work?
Bridging finance for divorce works in the same way as conventional bridging finance. A few of the key features of bridging loans for divorce (and other purposes) are as follows:
- Loans available from £20,000 with no upper limit
- Repaid in a single lump sum after 6 to 18 months
- Can be used for any legal purpose whatsoever
- Competitive loans available for poor credit applicants
- No proof of income or employment status required
- Monthly interest as low as 0.5%
- Loans can be arranged and accessed within a few working days
- Available with LTVs as high as 85%
- Can be secured against any type of property (and other assets)
- No arrangement fees or exit fees
Essentially, bridging finance works in a similar way to a mortgage, but on a much shorter-term basis. The loan is arranged in a matter of days, and the facility is repaid in full within months.
During time-critical situations where financial matters need to be resolved as quickly as possible, bridging finance offers a practical and affordable solution.
For more information on any of the above or to discuss divorce finance in more detail, contact a member of the team at UK Property Finance today.
Frequently Asked Questions
What is a bridging loan?
Bridging loans are short-term secured loans, which can be used for any legal purpose. They are secured against assets of value in the same way as a mortgage, but are much quicker to arrange and are designed to be repaid within 6 to 18 months. As the name suggests, bridging finance is designed to “bridge” temporary financial gaps.
How long does it take to get the funds?
With all the required documentation and supplementary evidence in place, a bridging loan can be arranged in a matter of days. Completion times vary from 1 to 14 working days, depending on the borrower’s requirements and the strength of their application. Broker support can significantly accelerate the speed and simplicity of bridging finance applications.
Can I still get a bridging loan with bad credit?
Yes – bridging loans are issued primarily on the basis of security, along with the applicant’s proposed exit strategy. If you have assets of value (like your home) to cover the costs of the loan and a plan to repay the balance in full by an agreed date, you can get a bridging loan – irrespective of your credit status.
Can self-employed workers qualify for bridging finance?
Yes – employment status and proof of income are not ‘binary’ eligibility criteria with bridging finance. If you have viable assets of sufficient value to cover the costs of the loan and can comfortably afford to repay the balance in full by the agreed state, your employment status is not important. However, it is important to enlist broker support at an early stage, in order to ensure you target the right lenders with your applications.
What type of security is required?
Most bridging loans are secured against properties owned by the applicant. These can be residential properties, commercial properties and all types of mixed-use properties, along with land (with or without planning permission). Some lenders are also willing to accept other assets of value or security, including business equipment, cars and commercial vehicles, jewellery, watches and even company shares.
For more information on any of the above or to discuss any aspect of divorce finance in more detail, contact a member of the team at UK Property Finance today.