When looking at different types of finance, you can find yourself running into a whole new library of terms to learn and master. One such term is a bridging loan.
How Can A Bridging Loan Help?
A bridging loan is a useful loan for people in a specific set of circumstances, and acts as a way to provide funds for the purchase of a new home, when they are awaiting the settlement of the sale of their previous property to come through. Because the person knows they have the finances incoming to make the payment, it’s just a matter of time until the money clears and they can pay the loan back, making it a fairly straightforward process.
Remove The Pressure
While this might sound a little bit confusing, by allowing you to place the net equity in an existing home as the down payment for a new property, it takes away a huge amount of the pressure to find accommodation quickly. It allows the moving process to be more gradual, allowing you to do things properly without any time constraints.
Jump The Queue
However, one of the main benefits of a bridging loan is that is allows you to get a property while you are waiting for the money to clear – the property you may desperately want could already be sold by the time your settlement clears. This means that you can make a poor decision on the next property to buy as your main choice is already gone. With a bridging loan, you can jump that time gap and get the property while it’s still on the market.
Because you only pay the interest back with a bridging loan until you actually get the money that you are due, this allows you to have a comfortable influx of finances to help move things along.
Residential Bridging Loans
Bridging loans can also act in a different way. Otherwise known as a residential bridging loan, you can take out short-term finance and use your property as the collateral until it’s sold. Residential loans are usually used to help improve your property, if it needs investment to actually get the sale.
Sometimes, the property needs so much work it’s going to cost too much money to make those improvements to entice a buyer.
A bridging loan allows you to dip into your future profits with a loan that allows you to increase the value of your current property. It’s a solution that many people are using, as most people don’t have the large-scale finance needed to carry out renovation or high-end improvements on a home before selling it.
With this method, you can help keep your finances in check and use the future profits you intended to get from selling your home to cover the costs. If you think that a bridging loan could be something that would benefit your own circumstances, then why not talk to us here at BUSINESS about how we can help?...