Bridging Loans- Meeting Short Term Financial Shortfall in Property Transactions

by Ramesh Chandra Seo Analyst Are you looking for a short term funding option to buy a home or any other property? It is usually not possible to raise the money for buying a new home until you sold an old one. This leads to a financial gap and to fill that gap at certain times, bridging loans allow taking an advantage of the opportunity.
What are Bridging Loans?

They are a short term funding facility that helps to bridge the financial gap and useful for purchasing a property, financing an unexpected bill or raising money for cash flow.

Mostly it is useful to meet the financing gap related to property transactions. It is designed to help the property buyers to complete the purchase of the property until they get the selling amount of their old property. Besides, it can act as a short term financing solution to meet unexpected expenses. Due to its feature to fulfil the immediate financing needs, it is more expensive as compared to other lending money.

Along with helping property buyers in such circumstance, this kind of debt helps to buy the property at an auction. After the financial sources, including banks disincline to lend money at the time of financial crisis; there is an inflow of bridging lenders into the market. However, due to this reason, the interest rates may be high, but the buyers can purchase their dream home. As per the financial experts, if you are lending such debts, the interest rate may cost you 18% per annum.

For whom the loans are useful?

Generally, the particular debt is suitable to meet financing needs of property owners and amateur property developers. Besides, such debts are profitable for wealthy borrowers who are looking for straightforward lending on residential properties.

Reasons for taking an advantage of such loans?

As already stated, such debts are useful for multiple reasons, including property investment and development. Recently, the trend to lend a particular due amount is increasing among the borrowers because the private banks are not lending money to process the application for higher amount of home loan. Although it seems the best option, but one should make an exit strategy to avoid any future consequences. Also, if someone has not approached for such debt amount he/she should be careful, as there may be hidden and hefty legal fees or any administration fees.

Where Can You Get Them?

You can find multiple financial companies offering such facilities, but it is better to choose an FCA regulated broker. The broker recommends if lending the loan is profitable for you depending on your circumstance.

So, if you are one of those property buyers or lenders who are facing a financial gap in property dealing, the bridging loans are the best solution to meet immediate financial needs.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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