Benefits of a Bridging Loan
A bridging loan as the name implies is a loan used to "bridge"
the financial gap between monies required for your new property
completion prior to your existing property having been sold.Bridging loans are short term loans arranged when you need to
purchase a house but are unable to arrange the mortgage for some
reason, such as there is a delay in selling your existing
property.
A bridging loan can be used to cover the financial gap when
buying one property before the existing one is sold. They are
looked on as short term lending to cover a specific short term
need.
A bridging loan can also be used to raise capital pending the
sale of a property.
Bridging loans can be arranged for any sum between £25000 to a
few million pounds and can be borrowed for periods from a week
to up to six months
Because of the nature of bridging loans they can usually be
arranged at short notice and within a few days.
A bridging loan is similar to a mortgage where the amount
borrowed is secured on your home but the advantage of a mortgage
is that it attracts a much lower interest rate. While bridging
loans are convenient the interest rates can be very high.
When considering a bridging loan please remember that you may be
paying not only for the bridging loan but also for the mortgage
on your existing property.
Bridging loans are widely available and can usually be arranged
by your existing mortgage provider.
Although bridging loans are convenient, you need to consider the
pitfalls too, like the high interest rates.
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