A bridging loan is a type of short-term loan that can be taken out for several purposes. The following are six reasons why they may be helpful:
Bridging finance was developed to help home buyers complete their purchases swiftly. Buyers in a chain may require the sale of their property to fund acquiring their new one, but delays can sometimes threaten this purchase. A bridging loan can deliver a short-term solution, allowing a new home to be purchased while waiting for the sale to complete. Since introduced, the use of bridging loans has broadened to include auction property purchases, refurbishments and the finance of new build housing projects.
Unlike a mortgage, which can see a borrower tied to monthly payments for 25 years, bridging loans can be acquired with much shorter durations, from a week to a year, although it’s also possible to arrange longer terms.
Many lenders of bridging loans will not charge fees for early loan repayments, with interest only paid while finance is in place.
Unlike other loans, bridging finance may be open to people with poor credit scores. Providing a borrower can give security – typically property – lenders will consider those with an imperfect history.
Often arranged within a two-week period, bridging loans are a fast finance option compared to mortgages acquired over multiple months.
Finally, buyers with a bridging loan can pay quickly, making them an attractive option for sellers.
If you are interested in a bridging loan, contact our team at Ingard Financial today for more information.
