A bridging loan plays a very significant role for people buying new houses. This loan help families get a good deal on houses situated in good neighbourhoods or even bigger homes. With the current economic conditions, not many households can save monthly income until it accumulates to a sufficient amount when buying a new home. However by using this loan families are able to own even two properties. Many lenders of these loans are ready to offer borrowers the money they require to purchase new homes without calling in their existing houses until when they sell them.
A bridging loan can either be a closed finance or an open finance. A closed finance loan has a backing of a legal contract. There is a repayment date that is agreed upon by the borrower and the lender in a closed finance loan. On the other hand, an open finance loan does not have a specific repayment date. Borrowers can use this loan for other purposes other than purchasing a property. Nevertheless, both open and closed loans have several benefits to the borrower.
One of the major benefits of this loan is the flexibility that they allow a borrower. Basically, this loan is borrowed for buying a new property. However, people borrow it when having temporary money problems regarding their properties. Thus, individuals in need of money to solve cash problems on their properties that may be solved later go for a bridging loan. For instance, you can use this loan for debt consolidation, renovation and property acquisition among others. Depending on your needs and ability to repay this loan, payment duration can range between six and twelve months. Thus, if you have not received payments after selling your old property, you can use this loan to buy a new one.
This loan is also easy to access. It has a quick application process that last for a few hours. Although this loan has the various application steps that are similar to those of a mortgage, they are convenient and easy to go through. This makes it easy for applicants to go through and get the money they need with ease. You can apply for this loan regardless of your credit history. However, submitting your credit history is among the major eligibility requirements. If your credit history is good, you will benefit from a loan with low interest rates. The purpose of credit history is to proof that your assets will repay the loan.
This loan also allows borrowers to renovate their properties using them as security. You can borrow this loan against a property regardless of its repair or renovation needs. Thus, you can refinance or complete repairs on a property using this loan. Perhaps, the most outstanding benefit of this loan is the fact that you can apply for a larger amount of money depending on the property value, your repayment period and the credit history. The amount you are eligible to apply may also depend on the duration you require to repay. Generally, convenience and flexibility are the major reasons one may opt for a bridging loanrather than other loans from banks and other lending institutions.
Abbas Hussain writes on behalf of Integrity SEO Experts, which is a company that serves a number of clients in the property and real estate industry.