The bridging loan, otherwise known as a short term secured loan, is a great way of accessing quick cash. The online application form is quick and easy to complete and takes just a few minutes to start the loan process. It certainly beats the long method of going to the traditional banks or a building society.
You might be thinking, what makes these loans useful and why would anyone need to get a bridging loan.
Whenever you face an unforeseen expense that must be urgently paid, then this kind of loan can be extremely helpful. Bridging loans are a good for short term financial tool, and a great interim solution for a larger financial challenge you face.
Usually the loan term will last for a few weeks and up to around 18 months. Sometimes a small extension may be possible, though it is best to avoid delaying the repayment for too long, as it will make it even more expensive to pay back.
This is because the downside of a short term loan is the high rate of interest. It must make financial sense not just for you the borrower, but also for the lender. This certainly shouldn’t put you off from using a bridging loan, but you simply need to understand there are certain situations that could need such a loan and others which don’t. When there is an immediate and truly urgent need for extra fiancé, then you shouldn’t hesitate applying. In such cases the cost of the loan is less of an issue, as raising the required funds is the priority.
The loan is secured by them means if a valuable asset you own. In the majority of cases this is in the form of a property owned by the borrower. The maximum borrowing amount depends on how much equity you own in the property and the percentage allowed by the lender. Typically it is around 80% of the equity value. In terms of how many pounds you can potentially borrow, it could be as little as 25,000 pounds and up to a million or even more. It depends on the security and your particular needs.
The most common scenario that can really use a bridge loan is when you are moving home. Most people will need to sell the home they currently live in, to be able to purchase a new home. This means for a successful move these two transactions must be completed in a timely manner. Waiting too long to either find a buyer or to receive payment for selling your home, can mean someone who already had their funds in place could get your dream home. Unfortunately, no matter how hard you try such situations can occur.
The solution would be to bridge this cash gap, by using a bridging loan to quickly get the financing you need and making sure all transactions are quickly resolved.