A Bridging Loan Should Be Viewed As A Short Term Financial Solution
Home buyers in Camberley, Chobham, Fleet and Yateley who are seeking solutions to their short-term financial issues may have heard about bridging loans but may not know what they are. Fortunately, our expert team at Waterfords Estate Agents is on hand to give you all the information you need about what these loans are and when you can use one.
What Can I Use a Bridging Loan For?
A bridging loan is a short-term borrowing solution that is commonly used as a bridge between selling your property and buying another. Typically, a bridging loan can be used to:
How Does a Bridging Loan Work?
A bridging loan is different from a standard mortgage since it isn’t tied to income. You can borrow amounts from £50,000 up to as much as £10 million, however, this type of loan can be risky since it must be secured against some form of collateral, typically a property which you could lose if you cannot repay your loan.
The amount of the loan will depend on equity and usually, the maximum amount you can borrow is 75% LTV (loan to value) including interest. The lender will also want to know how you plan to pay off the loan before granting you the money. There are several different exit strategies but the most commonly seen include:
Are There Other Costs Associated with Bridging Loans?
A bridging loan often incurs other fees as well as your interest repayments such as:
Often, these will be a percentage of your total loan, and checking the amount you’ll pay before signing the agreement is essential.
Is There More Than One Kind of Bridging Loan?
You may have either a closed or an open bridging loan. With an open bridging loan there is no fixed repayment date, but you’ll usually have to make full repayment within one year. With a closed bridging loan, you’ll have a fixed date for repayment and therefore, being accepted is more likely and the rates are usually more favourable.
What Are the Advantages and Disadvantages of Bridging Loans?
Advantages:
Disadvantages:
Is There an Alternative to A Bridging Loan?
Although a bridging loan could be the solution you’ve been looking for, there are some other options which could suit you better depending on your circumstances. These include:
If you’re ready to buy a property in Camberley, Chobham, Fleet and Yateley, get in touch with Waterfords estate agents for our assistance. If you have more questions about bridging loans and finance we can put you in touch with our trusted and award winning local financial advisors. Their initial advice appointment is free and without obligation.
Camberley: 01276 66566
Chobham: 01276 858589
Fleet: 01252 623333
Yateley: 01252 870222
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