At some point in life, you may be required to move from one residential home to another. This need may get you unprepared or when you are not done with the current home payment plan. At this point, you should not stress over selling your house to acquire another one. Bridging loans allow you to buy another home without necessarily selling your existing home immediately. From the word bridge, the loans are provided for a short term to fill the gap in time between the time you purchase one property and selling of the already existing one.
Requirements for the bridging loan eligibility
Despite the loans being short term, there are some requirements that help the providers with the right information on whether you are eligible. You need to have evidence of a repayment plan which is very clear. This may be through means like cash or by a cheque. Another requirement by the lender is that you must have evidence of the property you want to acquire and the amount of cash you are willing to pay for it. Another requirement is proof of the efforts you are making towards repaying the loan.
How does the bridging loan operate
An open bridging loan plan does not specify the time limit. The time limit nevertheless is usually less than one year. An arrangement fee is a requirement. The repayment plans the different depending on the agreement. There are those that require to pay for your loan until settlement. In some others, you pay for both the loan from the time you acquire it. The interest on the bridging loans gets added to your repayment plan and is payment has to do until the current property is sold.
Why opt for bridging loans
One may wonder the essence f these loans which are a little it expensive than other regular loans. The difference comes in with the time taken for approval. It takes 24 to 48 hours for the bridging loan to be accepted while regular loans take weeks for the lenders to approve. since bridging loan brings money to the account faster, it is always a consideration over regular.
What are bridging loan used for?
The loans are usually used for property purchase and also renovation. It is a finance that is used for property developments. The plans can be both residential or commercial.
In conclusion, bridging loans offer one with a better alternative source of income. This is important to help one to keep moving in the period between the selling of an existing property and buying a new one at the same time.