Bridging loans are short term loans that are usually used to bridge the shortage of money that arises between selling an old property and buying a new one. Imagine that you have decided to buy a new house in one of your favourite locations. You have taken a mortgage that is not equal to the purchase price of the house because you are sure that your old house will yield a lot of money that you can use to pay that part of the new house's price which you have not borrowed as mortgage. Now, what will you do if situation turns out as such that you have to finalize the new house deal first before selling your old house? Of course, you will have to take a bridging loan so that you can pay totally for the new house.
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bridging loan can also be availed if you need to buy a property immediately, but a bank or any other financial institution is not willing to lend you at present. If you are supposed to get the loan amount after two months or more, what will you do in the meanwhile? Well, you solution is a bridge loan.
A bridge loan (also called a swing loan) is usually borrowed for a period of 2 weeks to 3 years and is most commonly used to finance the purchase of commercial or residential property.
Bridging loans are secured against a property. This reduced the risk for the lender and therefore the terms and conditions of such loans are quite easy. The interest rate is quite affordable there is flexibility in the choice of repayment term as well.
Bridging loans can be borrowed by people with adverse credit record as well. Since these loans are secured, lenders usually ignore the missed payments, arrears, default, county court judgments (CCJs) or bankruptcy that may be there against a borrower's name.
Rates of bridging loans vary from lender to lender. It is advisable therefore that you compare the rates of different lenders UK before applying for the loan. Also, apply online to save time land avoid unnecessary paperwork.
The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Apply-4-loans as a finance specialist.
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