Guide to Bridging Loans

Written by John Mussi


Here is a useful guide to bridging loans. This is a loan that is usually taken out to solve a temporary cash shortfall that may arise when buying a property or business. It's basically a very short term mortgage. Like a mortgage, it's a loan that is "secured" against property.

A bridging loan is a type of loan that is used to cover shortfalls between buying one property and selling another. A prime example of when you might need a bridging loan would be if you're ready to buy a new home but are let down onrepparttar sale of your existing one. To secure your new home, before it goes torepparttar 142153 competition, you could use a bridging loan.

A bridging loan is a short term mortgage which is secured by your property. This is usually arranged by getting a mortgage onrepparttar 142154 new property, and taking out a second mortgage onrepparttar 142155 property being sold. This type of loan is mainly available for house sales and is usually taken out to solve a temporary cash shortfall which can happen when selling and buying different properties or to pay for renovations. It 'bridges'repparttar 142156 gap betweenrepparttar 142157 purchase of a new property andrepparttar 142158 sale of an existing one.

The bridging loan allows you to borrow over a short term which you can pay back as soon as you have sold your home. Because ofrepparttar 142159 short-term nature ofrepparttar 142160 loan however you should expect to pay more interest and higher fees than with a long-term loan.

You can also use a bridging loan to purchase properties at auction, fund short-term commercial or residential renovations, and to safeguard a property purchase ifrepparttar 142161 mortgage is delayed. A bridging loan can be extremely flexible.

Inrepparttar 142162 case of buying property, a bridging loan is normally secured by getting a mortgage onrepparttar 142163 new property, and taking out a second mortgage onrepparttar 142164 property being sold.

This can berepparttar 142165 most cost-effective way to fillrepparttar 142166 gap that can sometimes occur between buying and selling your property. Due to being only a short term loan, Bridging loans are usually sold at a higher rate than a conventional mortgage.

Why Choose a Bridging Loan?

Written by John Mussi


Listed below are some ofrepparttar reasons for choosing a bridging loan. A bridging loan is a short term mortgage which is secured by your property. This is usually arranged by getting a mortgage onrepparttar 142152 new property, and taking out a second mortgage onrepparttar 142153 property being sold.

In effect, this type of lending is a kind of mortgage. It is secured on your home, but withoutrepparttar 142154 low interest rates usually associated with a mortgage. You must be aware ofrepparttar 142155 risks associated with this. If you fail to sell your existing home, there is a chance you'll have to sell your new home just to pay offrepparttar 142156 lending.

Probablyrepparttar 142157 most common use of a bridging loan would be connected to buying a property. A bridging loan gives you an agreed amount to help you bridgerepparttar 142158 gap between selling and buying your property.

Being self employed or having an adverse credit history or CCJs need not be a problem. A bridging loan can even enable people who have an adverse credit history to build a track record before applying for a conventional mortgage. A successful bridging loan can have a positive effect on a borrower's credit score making future finance more attainable.

Bridging loans can be used to purchase properties at auction, fund short-term commercial or residential renovations, and to safeguard a property purchase ifrepparttar 142159 mortgage is delayed.

A useful feature of bridging loans is thatrepparttar 142160 client can repay capital at any time, thus reducingrepparttar 142161 outstanding balance and monthly instalments.

A bridging loan can be used for a variety of purposes such as:

To enablerepparttar 142162 purchase of one property beforerepparttar 142163 completion onrepparttar 142164 sale of another.

Cont'd on page 2 ==>
 
ImproveHomeLife.com © 2005
Terms of Use