What is a Bridging Loan?

A bridging loan as the name implies is a loan used to "bridge" the financial gap between monies required for your new property completion prior to your existing property having been sold.

A bridging loan is in simple terms a short-term mortgage that is secured against the property that you are selling, with the money that is lent being used to complete the purchase of the new property. Because of the nature of their use, bridging loans can be arranged in a very short period of time, usually around seven to ten days, which is important when you need to complete on the purchase or risk loosing the property.

Bridging loans are short term loans arranged when you need to purchase a house but are unable to arrange the mortgage for some reason, such as there is a delay in selling your existing property. Timing is of the essence when selling one property and buying another. Sometimes if you are looking for a new home and the right property becomes available, it is not always possible to wait until your current home is sold.

The beauty of bridging loans is that a bridging loan can be used to cover the financial gap when buying one property before the existing one is sold. For example, if you are in a chain, where you are buying a property at the same time as selling a property, it's possible that you'll be put in the situation where you need to complete your purchase, but the funds from your buyer are not available. You are now under pressure to complete on a particular date but do not have the funds available. This is where bridging loans come in. They are looked on as short term lending to cover a specific short term need.

Bridging loans can be arranged for any sum between £25000 to a few million pounds and can be borrowed for periods from a week to up to six months. Because of the nature of bridging loans they can usually be arranged at short notice and within a few days. Bridging loans are widely available and can usually be arranged by your existing mortgage provider.

A bridging loan is similar to a mortgage where the amount borrowed is secured on your home but the advantage of a mortgage is that it attracts a much lower interest rate. While bridging loans are convenient the interest rates can be very high. When considering a bridging loan please remember that you may be paying not only for the bridging loan but also for the mortgage on your existing property. Although bridging loans are convenient, you need to consider the pitfalls too, like the high interest rates.

The downside to the fast nature of these types of loan is that the interest rates charged on them are relatively high, this is because not only are they short-term and for large amounts, but the risks to the lenders of non-payment are higher than for other circumstances and this is taken into account when the loan rates are calculated. Although the rates are high when compared to other loans available on the market, when you take into account the short amount of time over which this interest is charged, and the benefits that a bridging loan can bring, the costs are reasonable.

Bridging loans are designed to provide you with the equity from your current home in order to make your new purchase, before you are able to sell your own property. The loan is secured against the home that you are selling in the form of a mortgage or second mortgage, and will allow you in general to release around 65% of the property's value. With these funds you are then in a position to complete the purchase of the new property, and once your old property sells you can clear the bridging loan. If you are considering such a loan, you should be confident of a sale, and that you will be able to clear the debt within six months, as the high interest rates are something that you do not want to be paying long-term.

Bridging loans are available to the people that have found it more difficult to get mortgages, such as those with an adverse credit rating. This enables these people to build a track record before applying for the traditional mortgage. Bridging loans can take from 48 hours at the shortest to around ten days if the circumstances are more complex.

Despite the costs, bridging loans are very popular, after all if you have spent a lot of time searching for the perfect property you will not want to miss out on it because of a relatively short delay in the sale of your current property. It is in these cases where bridging loans can prove invaluable, enabling you to secure the sale of the home that you want, and concentrate on the sale of your property at a later date.

Bridging loans can be provided for:

Residential property

Commercial property

Land

New build

Renovations or refurbishment

Speculative properties

Conversions

Overseas property

You may freely reprint this article provided the author's biography remains intact:

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

---

Why Choose a Bridging Loan?

Listed below are some of the reasons for choosing a bridging loan. A bridging loan is a short term mortgage which is secured by your property. This... Read More

Poor Credit Mortgage - Overcoming Financial Slumber

There is a huge market for homeowners who have credit issues like - poor credit, sub prime loan borrowers. Some years ago what was seen as a... Read More

Holiday Loans Can Expand The Horizon Of What You See

Why do kids get all the breaks? Winter-weary adults, fed up with gray, uninspired landscapes need spring vacation too. This year consider a get away to a... Read More

Compare Payday Loan or Cash Advance Lenders Online Before You Borrow

Comparing payday loan lenders, also called cash advance lenders, online guarantees that you will find the lowest rates and best terms. Payday lenders are required by law... Read More

High Risk Personal Loans ? Revive Frustrated Loan Hunting Attempts with High Risk Loans

Bad credit seems like an unfinished business, you can't shake it off, and you can't move on without putting it away. Unfinished business is meant to be... Read More

Benefits of a Business Loan

There are many benefits in choosing a business loan, some of which are listed below:What's the fastest way of raising money for your business idea? A business... Read More

Personal Loans - To Make A Personalized Financial Agenda

The phrase 'tailor-made' ought to be made for personal loans. Personal loans have become relatively easy to acquire in UK. More and more loan providers have come... Read More

An Overview of Getting a Homeowner Loan

Should you be in the market for a homeowner loan, you might find yourself wondering exactly how to go about finding the loan solution that you're looking... Read More

No Credit Car Loans - Even With No Credit History, You Can Still Get Approved

Even it you have no credit history, you can still get approved for a car loan. With a car loan, you can purchase your vehicle and build... Read More

Best Car Loan Rates - Tips To Getting a Low Auto Loan Rate Online

Online car loan shopping practically guarantees that you are getting the best rates. Your location is no longer a barrier to finding the best auto loan rate.... Read More

How To Easily Find A Military Loan

Military members the price for serving your country and defending freedom is difficult, fortunately finding the right loan to fit your situation doesn't have to be when... Read More

Instant Payday Loan and Instant Payday Loans

Instant payday loans are financial loans that are available for anyone who is experiencing an unexpected crisis and is in need of additional cash fast. A lending... Read More

Thinking Of Co-Signing For A Loan? Read This First

It is quite common for someone, who is having trouble getting credit, to approach a friend or relative to act as a guarantor or co-signatory for a... Read More

Guide to Bridging Loans

Here is a useful guide to bridging loans. This is a loan that is usually taken out to solve a temporary cash shortfall that may arise when... Read More

Guide to Business Loans

Here is a useful guide to business loans. Business loans are loans specifically tailored for enterprising business people who are just starting their own companies or existing... Read More

Alternative Ways to Avoid Payday Loan

If you spend more than you earn on a regular basis, it is a bad practice. To overcome this situation, if you opt for a payday loan,... Read More

A Guide to Finding Cheap Loans

Finding cheap loans isn't always easy? it seems like every time you turn around new rates and fees are added and the loan process becomes increasingly frustrating... Read More

Quick Cash Loans Online - A Fast Way to Get an Emergency Cash Advance

If you need a fast way to get an emergency cash advance, then apply for a quick cash loan online. Payday loan companies now offer instant approval... Read More

UK Loans Guide - Channelising Your Rising Budget in a Productive Mmanner

Every unknown road needs a milestone to configure where it leads. Every loan type in UK requires a guide to steer through the loans market. The vastness... Read More

Useful Tips On Buying A New Or Used Car

Buying A New Car: A new car is second only to a home as the most expensive purchase many consumers make. That's why it's important to know... Read More

A Secured Loan Could Save You Money

What is a Secured Loan?A secured loan is any loan that is secured on your home or property. It is any loan which requires you to provide... Read More

Applying For a Student Loan

Studying at college can be an expensive business and you are likely to be considering taking out a Student Loan to help you meet all our... Read More

Seven Tips For Credit-Enhancing Your Business Loan

What are the avenues available to businesses with weak credit profiles or to companies pursuing credit transactions that are perceived as too risky by credit providers? Many... Read More

The Basics of Finding a Loan for People with Bad Credit

If you've ever tried finding a loan for people with bad credit, you might think that it's impossible. Everywhere you turn, it seems as though there's nothing... Read More

Understanding Personal Loans, Cash Advances and Payday Loans

Have you ever been short on cash? Has an unforeseen event emptied out your wallet? Are you short on funds in-between paychecks? I am sure that many... Read More

How to Get a Secured Loan UK

Living in the United Kingdom, you might find yourself in the market for a secured loan UK. Before rushing out to try to find one, however, you... Read More