Reasons To Get A Bridge Loan
Bridging loans are useful for people with bad credit scores. A bridging loan is useful for someone who want to buy a property and cannot manage to raise the down payment amount. There are short term and long term bridging loams available. The fact that short-term bridging loans are easy to get makes them favorite among home buyers. The loan application process of a bridging loan is considered very short and easy. Bridging loans have a maximum of three years and a minimum of two months. The interest rate of a bridging loan will increase slowly when you pay back the loan faster. Once your short-term bridging loan is approved then it is easier to own the property. Sometimes you will find lenders offering bridging loans to cover mortgage payments of an existing home. Bad credit bridging loans are typically secured loans. The equity of the property is usually the security of the loan. People with good credit scores are charged a lower interest when they take up a bad credit bridging loan.
What You Need To Know Before Getting A Bridging Loan
Financing the purchase of a property is the main reason people apply for bridging loans. A bridging loan with a fixed repayment date is known as a closed bridging loan. Unlike a closed bridging loan, an open bridging loan does not have a fixed repayment date. Closed bridging loans are popular where the contracts have been exchanged on the property. Open bridging loans are popular among buyers who are yet to exchange property contracts with the seller. People who are still in ownership of the property they have but want to buy a new property should apply for an open bridging loan. You may consider taking up a bridging loan if an application for a mortgage has been declined. Calling a bridging loan company before applying for a loan will enable you to get the necessary information on whether you qualify for the loan or not.
Bridging Loans Prerequisites
The first thing to know about a bridging loan is the rate of interest payable. Closed and open bridging loans are the two types of bridging loans available. A lending company will find the option of issuing a closed bridging loan safer. When it comes to applying for an open bridging loan you will find that there are no legal or valuation costs. People in self-build projects and buy to let investments can finance their projects using a bridging loan. If there are any outstanding taxes on a property and the owner passed on; the trustee may apply for a bridging loan to pay the outstanding fees to get the property. Bridging loans are a lifeline when it comes to financing several situations.