Bridging Loans - Funds for Instant Home Buying
You may be finding it hard to sell your old home. This could be due to different reasons including slackened property market. Therefore you can't have funds in hands, by selling old home, to buy a new dream home that you located a few days back. Now you fear that lack of funds may result in you loosing the new property. It is in urgency like this that usually bridging loans are opted for. One can say that these loans are designed to instantly provide you financial support for buying new property. In other words you are able to raise finance to bridge gap between buying new home and sale of old home.
Before you apply for a bridging loan, you must note that the lender will first see if you have already made sale exchanges on old property or you are yet to find a suitable buyer. A bridging loan will be decided accordingly. You would be thus going for either closed or open bridge.
If your existing property is already exchanged on sale then it is a closed bridge and is considered as safe for the loan lender as chances of sales falling through are less. But if you are yet to find a buyer then it is an open bridge which is a little risky for the lender as sales may not materialize at all in a given period of the loan.
Bridging Loans are associated with higher rate of interest. The rate is usually kept higher than base rate of central bank. High interest rate is because of risks involved in the loan and also because of short duration. These loans have usually of 12 months duration for repaying. But a closed ended bridging loan, being less risky, will attract lower interest rate as compared to the open ended loan.
So, it is very important for bridging loan lender to first see that your existing property is being actively marketed for sale. The lender would also like to have a good look at your source of income to see whether or not you can meet the interest payments on the loan.
The loan amount is determined on the value of a property that you have to pledge as collateral. The lender would approve an amount that is a certain percentage of value of property, 60-70 percent for instance.
High street lenders and banks charge very high rate of interest on bridging loans. So you should opt for competitive rate offers from online lenders. Compare these lenders for a suitable deal.
Related Tags: bridging loans, 24hr bridging loan, easy bridging loan, short term bridging loans
Peter Taylor is a senior financial analyst at 24hrbridgingloan with an acumen for finance and insurance. In recent years he has taken up to provide independent financial advice through his informative articles. To find bridging loans, 24hr bridging loan, short term bridging loans, easy bridging loan visit http://www.24hrbridgingloan.co.uk/
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