All you want to know about bridging loans

Posted by CesarMuler on February 22nd, 2013

It is important to know about bridging loans before you take one. You don’t want to look like a fool when your bridging loan has been approved and disbursed. The below mentioned points should help.

When to use a bridging loan?
A bridging loan acts as a bridge between an immediate requirement of money and an amount that is due to you in the near future. So, if you want to buy a commercial property by selling off an existing property then you may want to opt for this kind of loan. You will have the money to buy the new property and then the loan can be repaid when the old property is sold off.

What is the rate of interest?
Since bridging loans are short term loans their rates of interest are higher than conventional loans. On the face these loans seems to have very low rates of interest but the interest is compounded and so the final rate of interest can be quite large. However, these loans are definitely not at all expensive when you compare with payday loans.

What is the usual duration of bridging loans?
A bridging loan usually has to be paid off in 2 to 18 months. It is a short term loan that helps you meet your immediate financial needs. You have a property that you want to sell to buy a second new property and this loan will help you immensely. However, to ensure that you adhere to the timelines of repayment you should make all arrangements to sell off your first property before you apply for this loan.

Who lends the money?
There are many lenders of bridging loans. Since a bridging loan is such an attractive option for both the borrower and the lender you find both kinds in the market. Usually there are private lenders that offer these loans. Hence, before you apply for a bridging loan it is important that you find out all about the lender. Your financial advisor should be of immense help in this regard.

What are the terms and conditions?
Although the basic terms and conditions related to these loans are almost similar different lenders have their own terms and conditions. It is best to go through these terms and conditions minutely so that you are aware of what to do and what not to do. Remember that non repayment of your loan may end up in the repossession of your property and you will never want the circumstances to turn that way.

Should I talk to my financial advisor?
It is absolutely important that you ask your financial advisor before applying for bridging loan. When it comes to taking long term loans in the form of mortgages nothing can beat what the banks offer you. However, you sometimes don’t have the time to wait for the bank to approve your loan and this is when bridging loans are so useful. However, these are not the best loans in the market and you should be sure that you need one.

There are certain points about http://financemyhouse.net bridging loans that the borrowers are not aware of. Before you apply for a http://financemyhouse.net bridging loan you should be aware of what such loans are all about.