Bridging loans can act as a remedy during your financial crisis. You can apply for a fast bridging loan whenever you need a financial help to make both your ends meet. These loans act as a great support for bridging the financial gap that you might be stuck in.
Bridging finance are short term loans which can be borrowed by a person, to fulfill both personal and commercial requirements, until he/she is able to arrange the required amount. You can borrow a cheap bridging loan, when you want to buy a new property either for your personal requirements or for commercial purpose, without selling your present property. Bridging loans, as the name suggests, builds a bridge between both the ends of financial gap caused during the process of buying a new property and selling the existing one. You can borrow a bridging loan not only for buying property but also for fulfilling other requirements like holiday expenditure, marriage, buying raw material and machinery for your business, etc.
They are of two types – open and closed.
Open bridging loan – you can opt for an open bridging loan if you want to buy a new property immediately but you don’t actually know when you will be able to sell your present property.
Closed bridging loan – unlike the open bridging loan, you can borrow a closed bridging loan when you need more financial help to buy your new property even after having sold your old property.
The amount of loan that you can borrow is determined based on the value of the collateral you are placing. The maximum limit lent varies from one principal lender to the other. While borrowing a bridging loan you should remember that these loans are short term loans, therefore the repayment time is short. Also being a short term loan, it has got higher rates of interest. However there are many lenders from whom you can borrow a cheap bridging loan with relatively lower rates of interest. It will always be wise on your part to do a proper research about the lenders and their rates of interest, before finally borrowing it. Also you have to pay a fixed sum at one time. So make sure you have the amount ready with you. If you fail to repay the loan amount within the fixed time, you may loose the collateral that you had placed while borrowing the loan.
They are also lent by many lenders for people with bad credit history. The interest rate for these borrowers might be a little higher. You can improve your bad credit score by borrowing a fast bridging loan and repaying it back in time. These loans are secured in nature and you need to place collateral with the lender while borrowing it and free it after repaying the loan amount. You can place your old property or the new property which you are buying as the collateral.