Is A Bridge Loan The Right Option For You?
If you have a bad credit score then you should apply for a bridging loan. A bridging loan is a good option to raise the required down payment for a particular property when you do not have ready money. You may apply for a short-term or a long-term bridging loan. Many home buyers prefer short-term bridging loans as they are easy to get. The process for applying for a bridging loan is short and straightforward. The minimum duration of bridging loans is two months while the maximum period is three years. One should be aware that the sooner you repay a bridging loan the less the interest rate rises. Short term bridging loans have been seen as the easiest way to close a deal on a property. Sometimes you will find lenders offering bridging loans to cover mortgage payments of an existing home. A bad credit bridging loan can be referred to as a secured loan. The loans are secured on the equity of the property. A bad credit bridging loan will attract a lower interest rate for a person with a good credit score.
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 useful to buyers that have already exchanged the property contracts. If the contract for the property you intend to purchase has not been exchanged then you should apply for an open bridging loan. 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. Ensure you make a call to a bridging loan company before applying for a bridging loan to explain to them the intent of the loan application and also to see if you will get the loan approved.
Essenstials Of Bridging Loans
When you are applying for a bridging loan you should find out the interest rates payable. There are two types of bridging loans the open and closed bridging loans. A closed bridging loan is safer for a lending company. When it comes to applying for an open bridging loan you will find that there are no legal or valuation costs. If you are in the buy to let investment business as well as self-build projects you will most likely use the bridging loans option. 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. You may find that a bridging loan offers you a lifeline to finance some dire financial situations.