The meaning of Bridging Loan is when you buy a home before you sell you existing home or previous home. Bridging Loans can able you purchase new home & give you some time frame to sell your old home.
Bridging Loans are also known as person having two homes at a particular time, it can be barely credible debt, but the sigh or relief will be old home which will sell soon & provide you some cash to clear your loans. Bridging loans are short term loans.
The biggest dis-advantage of a bridging loan is the high rate of interest. The rate of interest is much high which is associated with it. The main reason for such a high rate of interest is person having two homes which is under one loan, the interest charged more on such a distinctive loans. There are many alternatives available, though, to put off payments of fees until the old house sold at which time the fees are additional to new loan.
One more big concern with bridging loans is that it should the first property take a long time to sell it could ends up into the monetary troubles for loan receiver. If you have to make the quickly repayment of mortgage can bring you monetary pressure on you. It is very important for a borrower to think about the payments have to be made in case if the home is not sell quickly. In some cases option of forgoing will be better then taking a bridging loan.
Bridging loans are easier said than done to search for. The marketplace is small because the peril is much high. Such loans are for short term lender will not able to make handsome profit from it so they are not keen to provide such loans. Another major problem is that bridging loans required many formalities like paperwork etc, which make this process lengthy.
Borrower can do one thing instead of getting bridging loan that he/she can go for financing mortgage to buy the new house. There are large numbers of people who will not take such mortgage for those people bridging loans are available.
If there is no option left then only borrower should go for bridging loans. The borrower must look on each & every factor before going for bridging loan. Borrower should know how much it cost to him/her. Borrower must be preparing for selling his/her old house as early as possible so that the burden will be less and pay back immediately after selling old house. If the real estate market is not at the good pace then taking a bridging loan will not be a better prospective. If borrower caught up in such a situation it will be very frustrating for him/her. Addition to this it will not be a good situation for bank account of borrower. It’s very important for borrower to make a decision to go for a new home or not. Borrower must be fully accomplished with market environment that it is right to buy new home or not at that nick of time. Lastly, if you looked on the factors & you are satisfied that you can overcome each & every problem concerned with purchasing new house go for a bridging loan.
