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The downside to
fast nature of these types of loan is that
interest rates charged on them are relatively high, this is because not only are they short-term and for large amounts, but
risks to
lenders of non-payment are higher than for other circumstances and this is taken into account when
loan rates are calculated. Although
rates are high when compared to other loans available on
market, when you take into account
short amount of time over which this interest is charged, and
benefits that a bridging loan can bring,
costs are reasonable.
Bridging loans are designed to provide you with
equity from your current home in order to make your new purchase, before you are able to sell your own property. The loan is secured against
home that you are selling in
form of a mortgage or second mortgage, and will allow you in general to release around 65% of
property's value. With these funds you are then in a position to complete
purchase of
new property, and once your old property sells you can clear
bridging loan. If you are considering such a loan, you should be confident of a sale, and that you will be able to clear
debt within six months, as
high interest rates are something that you do not want to be paying long-term.
Bridging loans are available to
people that have found it more difficult to get mortgages, such as those with an adverse credit rating. This enables these people to build a track record before applying for
traditional mortgage. Bridging loans can take from 48 hours at
shortest to around ten days if
circumstances are more complex.
Despite
costs, bridging loans are very popular, after all if you have spent a lot of time searching for
perfect property you will not want to miss out on it because of a relatively short delay in
sale of your current property. It is in these cases where bridging loans can prove invaluable, enabling you to secure
sale of
home that you want, and concentrate on
sale of your property at a later date.
Bridging loans can be provided for:
Residential property
Commercial property
Land
New build
Renovations or refurbishment
Speculative properties
Conversions
Overseas property
You may freely reprint this article provided
author's biography remains intact:

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available online loans via the http://www.directonlineloans.co.uk website.