Bridging Loan Examples
Bridging Loans Explained UK
There are many different types of loans available, but not all of them are suitable for every situation. Bridging loans can be used to cover the financial gap between a purchase and the sale of a property. They are usually short-term and can be used for a variety of purposes.
They are often given in response to an emergency such as when you have found a house that is perfect for you but need some more time before you have enough money saved up to make the purchase.
What is a bridging loan and how is it related to property?
A bridging loan is short-term financing and can be for any number of reasons, such as waiting for a property to come on the market or waiting for mortgage approval. Bridging loans are also sometimes used by people who are buying their second property as they may not have enough equity in their first property to get a mortgage on it.
The interest rates for these loans can vary depending on how long you need them for, but typically they are higher than standard mortgages.
There are various types of bridging loans available from different lenders, with some being more popular than others. One example would be an interest only mortgage where you don’t have to pay back any capital until after you sell your house.
The loan can be granted when there are insufficient funds available to cover all of the costs associated with purchasing a property. This can happen when buyers need to sell their current property before they can purchase their new one, or when they have not yet received their deposit back from the sale of their current house.
In what circumstances can one avail bridging loan?
A person can avail this loan in the following circumstances:
- When one needs to buy a property and there are no other assets available
- When one needs to purchase an asset before selling another one
- To cover any financial shortfall until they can generate enough money from their assets
This loan should not be confused with an unsecured personal loan which can be used for any purpose and does not require any security. Borrowers are required to provide evidence of their income and show that they are able to repay the bridging loan before being approved for one.
Bridging loans are usually for a temporary period and are usually used to cover the time gap between selling your property and buying a new one. These are designed to be short-term, typically lasting for just a few months. This is because they are designed to bridge the gap between selling your home and purchasing another one.
