"Lack of money is no obstacle. Lack of an idea is an obstacle."
Ken Hak
The above lines clearly suggest that there is way out for every financial fix that occurs in our day today life. Likewise Bridging loan is one such answer to all your questions related to short term financial needs. Typically bridge finance is secured to buy a new property before an old property can be sold off. However, its use depends on the judgment of the borrower. He is free to utilize the bridging loan amount to as many uses as he desires. The bridging loan can even be used for weddings or for
Holidays.
Bridging loans are secure in nature therefore collateral is vouched against the loan, the valuation of collateral property decides the amount to be sanctioned for the bridging loan. Generally the loan value is equivalent to 65-70% of the collateral value. The Collateral properties can be of any nature like residential, commercial, retail shops, developing area etc. The interest rate charged on the bridge loan is high as compare to other forms of loan. It starts from 19% and goes as high as 29% , this is because bridging finance is provided at the time when other traditional loans cannot be obtained. Interest is calculated on a day to day basis and is payable every month.
Payments as against to bridge Loan are not due until the procurement of new home is finished or you sell off your existing home. The time period of Bridge loans are very short, it starts from a week and varies up to six months and maximum it can be extend is up-to an year. If the borrowers fail to repay the loan the collateral property can be used to recover the loan amount. Therefore it is advised to repay the loan within the proposed time. If necessary, once the old house is sold and you are in a position to repay bridge loan, you can obtain other type of mortgage from the same institution offering bridging loan services.
The entire process of bridge loan will cost you some extra charges other than the interest amount like Processing fee, Pre payment fee, valuation charges, legal fees which includes the fees of solicitor for all the legal help he has provided. Different banks charge different fees as per their process; however the above mentioned fees are common to all the banks.
Anybody can opt for bridging loan just he or she necessarily has to be off or above eighteen years of age. Even, the bad credit scorers can easily avail the bridging finance and can improve their credit report with timely repayment of the loan. All this makes bridging loans an easy and right option in the times of need.
