A bridging loan is a method for securing financing for simultaneously selling a property whilst purchasing another. It’s a way for homeowners and business owners to sell their current property and move to a new one without concern for how they’ll pay the additional expenses, like down payments and closing costs.
Organizations that issue these loans look at the former property and consider its worth and likelihood of sale. They don’t look so much at income to debt ratio. This allows many people to secure a bridging loan who can’t get other types of equity loans for paying those additional relocation expenses.
You should consider all the details before committing to this loan. With most bridge loans the term is fairly short, usually just a few months.
They also usually don’t require you to make payments during the initial period of the loan. Instead, your old property is expected to sell during that time and when it does, it will pay off the full amount of the loan.
Many bridging loan leaders will work the loan so they automatically receive payment from the sale of your old property, thereby ensuring they get paid. If the property does not sell during the contingency period (that’s the time that no payments are due from you), then you’d have to start repaying the loan with monthly installments. Repayment amounts and schedule are predetermined at the time you sign for financing.
It’s also important to understand that during the contingency period, while no payments will be due, interest will accrue, at least with the majority of these loans. This may make them a little more expensive than taking out an equity line to pay for moving costs, but the fact that bridge financing is more easily accessible to many borrowers is a definite upside to consider.
Use the Internet when looking at applying for a bridging loan, this is where you will get the best deals.
Moving is stressful no matter what, but trying to move to a new place while also attempting to sell your old place is especially so. This is certainly true if you’re still making mortgage repayments on the old property and now paying a monthly mortgage on the new place as well. A bridging loan makes the process a little less painful and stressful. It can ease the strain on your mind and your wallet, by taking away the worry of how you’ll pay closing expenses, down payments, etc. on the new place.
Positive finance is one of the UK’s leading bridging loans specialists for personal and commercial uses. We are principal lenders, which means with us you benefit from NO BROKER FEES and getting an immediate decision on a bridging loan is fast, easy and straightforward. Also, because our lending solutions are tailored to suit you and we are happy to consider any credit history, there’s really no need to go anywhere else