If you are thinking of buying a residential or commercial property but you have no sufficient funds. Or if you are waiting for your property to sell or any asset required to buy the new property. To help you combat a scenario such as this, lenders have designed especial loans called bridging loans.
Bridging loans are interim financial short term arrangements for the borrower to buy a property just in time. These loans bridge the gap in selling old property and buying the new one. Clearly this allows the borrower to have the sufficient loan amount to own a property instantly without having to sell old one.
Bridging loans are secured loans, provided against the borrower’s home or any valued asset. The loan amount depends on the value of the property given as collateral. Lenders usually approve bridging loan amount that is up to a certain percentage of total value of collateral. Each lender has a different loan to value ratio in determining the loan amount.
One characteristic of all bridging loans is that lenders charge a high interest rate. The high rate of interest is because bridging loans have risks for the lenders despite being a secured one. For example if the project funded from the bridging loan may not take off successfully. The other reason for the high rate of interest is because it is short term.
All bridging loans are approved for 2 weeks to 3-4 years as this enables you to sell the old property or get the finance to repay the bridging loan from any other source. What is more, you can pay the whole amount of the money borrowed from the lender once your old property has been sold. Otherwise you can pay interest per month to the lender.
One advantage of a bridging loan, is its easy approval for bad credit people as lenders do not take into account the borrower’s bad credit. So, the short term loan is useful in improving your credit score shortly as you can pay the loan off in time. You can locate numbers of bridging loan lenders on internet, searching for a lender will give you the opportunity to compare rates before you apply to one.
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Wow, excellent insight on Bridging Loans. I’ve been dealing with http://www.acceptances.co.uk – do you know of this Bridging Loan company?
No I have not heard of this company, all I would say when choosing a company is to make sure you do your research- if possible use a company that someone has recommended!
Keep smiling : )