Bridging Loans: How They Work
There are some people these days who usually have plans in selling their current property so they may be able to do a purchase for a new one. This is usually often difficult to correspond the selling of a certain property and to do a purchase for a new one. In this case, it usually leads to financial gaps. This is in fact where bridging loans are then organized.
A bridging loan at http://www.bridging-finance.co.uk has the process of evaluating a property. Also, this is usually offered to the value of the property and not on its purchase price. The bridging loan approval process is in fact is the beginning of acquiring a bridging loan. In case you are at your first time for a loan, the first thing that you need to do would be to first look for a loan lender that you find having ease with. If you are pre-approved, you will be able to get ideas on the amount that you could get. Also, being pre-approved will be able to help you in acting quickly at times when the property is available. The amount of loan will depend on the loan lender itself which is why you should do effective research to find better deals. Higher amounts could be arranged but is going to require more time.
A loan term for bridging loans could be anywhere from a week and six months. Two years would be its maximum term. Another thing is that the borrower should be sure on the situation for them to be able to repay the loan in the shortest time possible. Speedy finance is seen to be the primary reason and benefit when it comes to bridging loans. Another thing is that this can be made available in just a day when you could provide the needed documents. A lot of the bridging loan lenders would never ask for upfront legal and arrangement fees.
It is crucial that you are aware on the fact that bridging loans will be needing more payment. This is actually a fact because this kind of loan is a sizeable risk for loan lenders because the old property may not be sold immediately. Also, interest rates for bridging loans are higher compared to mortgages. Its typical interest rate is one half of a percent. This is also going to depend on the value of the collateral placed, credit history and the term of the loan. The borrower will start making interest payments at the end of the term at cases where the old property is not sold. When the property is sold, the loan is paid back. In case the property have been sold within the limit of the term, the unearned interests will be credited back towards the borrower. Learn more here.
