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An Overview of Bridging Loans

Are you caught in a situation where you have got your eyes set on a beautiful house with a big garden? But the problem is that you can’t find a customer to sell your existing house so as to finance the purchase of the new house. Adding to it, you do not have enough savings on your bank account to buy a new house. In such circumstances whom should you count on?

Well! You can apply for a Bridging Loan.

Now, let’s find out what are Bridging Loans and how can they help you in possessing the new house.

Bridging loans are considered as short-term loans used judiciously to cover up the gap between buying a new property before the existing one is sold. It is used to take advantage of a short-term financing opportunity in order to secure long term financing. Speed is the foremost appealing feature of Bridging Loans. Bridging loans specialise in solving the temporary financial crunch which you might face while buying a residential property, business or even paying for a renovation. Bridging Loans can also be used for reasons like, purchasing properties at auction, funding short-term commercial or residential renovations, and to safeguard a property purchase if the mortgage is delayed.

The term offered in a Bridging Loan usually ranges anywhere between a week and six months. The maximum limit is 2 year. So, before applying for a Bridging Loan, you should be definite about the fact that you will be able to repay it within a short period.

Though highly flexible in nature, Bridging Loans tend to have a comparatively higher rate of interest. Lenders usually face a higher risk in a Bridging Loan as there is no guarantee that the existing property will be sold within the said period. The Bridging Loan gets paid back once your old home is sold. All the unearned interest will be paid back to you if the house is sold within the said period.

Bridging Loans are specifically designed for short-term financing. Apart from the conventional collateral, i.e., your property, Bridging Loan also considers other form of security, such as, commercial properties, retail shops and overseas property. The list is a long one.

Bridging Loans creates room for everyone and considers cases like CCJs, Deafaults, Arrears, et al. It is considered as a realistic option especially for those who need funds instantly.

Things to consider: Before taking the plunge into the Bridging Loan market educate yourself about all the advantages and the pitfalls associated with it. Don’t settle for the very first deal which comes your way. Explore all the avenues. Choose the deal that that befits your requirements and circumstances perfectly, and if necessary seek expert advice.

The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Apply-4-Loans as a finance specialist.

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Our rates vary from 7.9% APR Variable to 19.9% APR Variable. The highest rate is for customers with severe credit problems

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. ALL LOANS ARE SUBJECT TO STATUS.