Credit crunches can occur any time and it adversely affects the mortgage industry. The mortgage industry takes a lot of time to recover from credit crunches. However, despite this situation, one corner of this business market is still booming though it does not catch the eyes of many. It’s the bridging loans industry and it’s a growing demand.
Do you have any idea what this loan is and how it can help home buyers? Below is more info to help you understand bridging loans.
BRIDGE LOANS – WHO NEEDS IT THE MOST
It is a secured funding option available to you for a short period of time.It is especially designed to bridge the temporary deficit of finance that buyers face while purchasing a property. This type of loan is helpful for the ones who are unable to sale off their existing property when buying a new one. Bridge loans provide you the fundsso that you can enjoy your next property even though your existing propertyis not sold off. Home buyers often fall foul to credit problems and in such a scenario, they become desperate to take any step for preventing their deal. These types of scenarios are what prompt the demand of bridging loans to bridge the gap.
Others who earnestly require bridge loans are the ones who are not liable tostandard mortgage loans while buying a property. Their path of acquiring a mortgage is not easy and so they opt for this easy funding option. Again, there are buyers who acquire cheap properties in auctions and hence, require finance quickly.
Thus, it is seen that a downturn in financial condition has made bridging finance enter mainstream. On this, CML or Council of Mortgage Lenders has commented, bridge loan is “clearly not the answer to anything other than a minority of financial problems”.
On the other hand, Melanie Bien has claimed that bridge finance is pretty useful provided you have in mind a realistic strategy for coming out of it. Say, for instance, you already have several buyers for your property. If you don’t have so, bridging can turn out to be very risky and you must avoid it by any means. If, by any chance, you are not successful in selling your old house, you can be in debt of an expensive loan and that too for a long time period.
Now, let’s find out what will be the costing and what will be available to you.
How long does a bridge loan last?
The term of a bridge loan can range from a single day to one year or even more than that, depending on who is providing you the loan. Generally, such type of loan is given for several months.
What is it costing?
As mentioned earlier, this is certainly expensive finance option, though the cost is little lowered due to high competition for it. You can use the bridging loan calculator to know the exact value you are liable to get.
So, when you go for bridge loans, you are advised to make a little research. Visit https://www.bridgingloans.co.uk for further details.