Why You Need To Get A Bridge Loan
Bridging loans are useful for people with bad credit scores. When you want to buy a new property and you cannot manage to raise the required amount for down payment you should apply for a bridging loan. There are short term and long term bridging loams available. The fact that short-term bridging loans are easy to get makes them favorite among home buyers. 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. In some cases people will apply for bridging loans to pay their mortgage payments. A bad credit bridging loan can be referred to as a secured loan. The equity of the property is usually the security of the loan. 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
The most common reason for taking a bridging loan is usually to finance purchase of property. A bridging loan with a fixed repayment date is known as a closed bridging loan. An open bridging loan does not have a fixed repayment date like the closed bridging loan. When the contract of a property that is being purchased is exchanged a buyer can apply for a closed bridging loan. On the other hand, the open bridging property is common where the contract is yet to be exchanged. If you want to buy a new property, and the old property you own is yet to be sold then getting an open bridging loan is suitable for you. Application for mortgages that have been declined can be substituted by getting a bridging loan. You should call the bridging loans company to share your plans and see if you are likely to get loan approval.
Bridging Loans Prerequisites
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. The closed bridging loan is considered a safer option for the lending company. Legal and valuation costs are not included in the open bridging loan making them very advantageous. 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.