When you are in the middle of moving your home but are unable to sell your current home, then you should think about getting loan that bridges the financial gap between the two successive real estate deals. These loans are specifically designed for the situations when there is a temporary shortfall in purchasing home. You may also need such loans when buying property at auction in order to pay for the property within the 28-day time frame.
These loans are somehow more risky for lenders, and so they are more expensive. Therefore, you should only take such a loan if you know that you can repay the loan within 6 to 12 months.
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Who can avail a bridging loan?
A bridging loan is often easier to avail that a normal loan or mortgage, with the self employed and people with poor credit score being eligible for such loans. It is a fact that loan sanction depends on the lender, but generally speaking you can avail loan as long as you can make the repayments.
How do these loans work?
You can usually borrow up to 80% of the value of the properties, minus any existing debt on that property that you have. Depending on the equity property valuation this means you can borrow between £25,000 and £250,000 as a standard figure.
How to get such loans?
Receiving these loans is much like getting any other loan, and involves shopping around various online lenders and financial institutions. However, the main difference is that for the loan approval a valuation will be carried out by the lenders to ensure property value. The process usually takes time, during which you can also sort out the rest of the legal processes involved in buying a house.
How much these loans cost?
Bridging loans [http://www.loans-park.co.uk/bridging-loans.html] vary in cost, with specialist lenders specializing in giving loans for auctions having the lowest rates. They assume that you can afford the property as you have already legally bought it at auction. If you have bad credit scores then you will obviously pay more. Interest rates on these loans are usually worked out on a monthly basis. However, the interest rate is less important because you are going to pay back the loan quickly and the most important factor is getting the loan on time for you to purchase the new property.
Is there any alternative?
If you cannot sell your house in time to finance the new property, then there are not many alternatives open to you apart from bridging loans. Of course you could get any traditional loan, but this can take longer time for processing and the loan terms might be too long or the amount offered too low. If you know that you will have the money back from a property sale soon, then a bridging loan [http://www.loans-park.co.uk/bridging-loans.html] might be the right choice for you.
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