A bridging loan can be defined as short-term finance that is provided by the commercial lenders who want to borrow for a given particular purpose such as an immediate and critical purchase of a property. These types of loans are also called interim financing. A lot of borrowers use these loans to bridge the cash gap when closing real estate transactions. This is because in most cases, there can be a time lag between the sale of property and purchase of another. The good thing about a bridge loan is that it offers you a lot of flexibility.
Where to Borrow
Usually, a borrower is a corporation or an individual and the loan can be customized for a wide range of situations. The reason for borrowing the loan could be the purchase of commercial property, residential property, or land. You can also use the loan during an auction where you bid on any given property with confidence.
The borrower is required to secure the loan with considerable collateral. Business equipment, heavy machinery, inventory, or other real estate properties can be the much-needed collateral. Even the property involved in the buying process can be used as collateral.
Bridging loans are classified into the closed and open loan. Open loans are available to borrowers who are planning to buy a new property before finalizing the sale of their current houses. On the other hand, closed bridging loans are available to borrowers experiencing a delay in moving to the new home because of money.
In most cases, you can be allowed to borrow up to a maximum of 65% of the property. Some lenders provide even up to 100%. Usually, the repayment period for these types of loans ranges from one month to 12 months. The period of repayment is dependent on the amount period and the terms of the lender.
Nowadays, you can get a bridging loan from an online lender or a traditional bank. You need a strong relationship with the lender when applying for this loan. Bridging Loan is one of the UK’s leading online lenders. The good thing about online lenders is that the application process is super-fast and convenient. For instance, you can apply it from the computer as long as you have internet connectivity.
You can browse a wide range of websites that provide loans. The lenders will check the details you have provided and advise you on the best possible loan deal. It is a good idea to collect loan quotes from a wide range of lenders and then carry out a comparison.