Your family just got bigger and now it’s getting difficult to adjust in your small home. So, you decide to move and you are all set to buy a new house in the vicinity of your favourite part of the country. Suddenly, you come to know that the money that you will be getting is not enough to buy your new home and you need more cash. Well, this is where bridging loans come into play.

As the name says, it is a short term loan that basically helps the borrowers in filling the financial gap between their old property and the new property. Indeed, getting a bridging loan can be really helpful during such urgent situations, but you need to educate yourself about it as much as possible. As doing this will ensure that you are able to make most of the loan. Here, in this blog, we have discussed all the useful things that you really need to know about this loan. So, let us begin.

How bridging loan really works?

Most of the lenders offer this loan for a period of 6 months but it can be extended up to a year according to the borrower need. Generally, the rate of interest in Bridging loans is about 2% higher than any other fixed rate products, but it can vary along with the terms and fees.

Now, let us talk about the repayment part. Well, borrowers have the liberty to complete the debt either in monthly instalments or by one-time full payment of loan along with the interest. Most of the borrowers prefer repayment of the loan after they receive the payment of their selling property. Generally, the amount that a borrower secures through the loan is evaluated by taking purchase value of the new property and subtracting it from the value of the older property and initial deposit. After the evaluation is done, the lender then finances a loan until the sale closes. This is done with the help of Bridging loan calculator.

What are the advantages of getting a bridging loan?

Before making any financing purchases, it is necessary to see the benefit that comes with the product. Now, here are some of the advantages that you need to know:

• Quick Process:

The biggest benefit of this loan is that securing it is quite fast and effective as compared to other types of long term loans where the process of approval is a bit complex. Other than that, you can even get the bridging loan in just a few days, if everything between you and lender goes well during the negotiations.

• Flexible criteria for lending

Another important benefit of bridging loan is that the lender will not be checking your credit history, income status, affordability or anything like that. The only thing is that the lender will be concerned about the value of the property that the borrower will be offered as security.

• No early repayment charge

One thing that makes Bridging Finance mostly preferred is that the borrowers have the liberty to complete their debt prior to the allotted time. And the lender will not even charge any penalty that happens in other types of private loans UK. For instance, you took a loan for the period of 12 months, but you are capable enough to complete the debt in 6 months only. In this case, you can easily pay the entire debt prior to the time and you won’t have to pay any sort of penalty.

Hopefully, you must have understood pretty much everything that you know about the Bridge loan that can help you in making a better choice. Well, in last, the call will be yours so if you have other options available, you can consider them too.

Author's Bio: 

Alina James is a financial writer with an overall experience of 10 years. In this article, she has discussed the bridging loans in details.