Often many of you prefer to buy any new home by selling your old home and use that money for the new purchase. However, you have to realize that in real life condition, you cannot get the customer ready to buy your house immediately, so that you can make a deal for your new home. You will have to first find a suitable new house of your choice. Having done that then you will need immediate money to buy this new property. In order to bridge that time until you are able to sell your existing property, you will need a bridging loan, so that you can make the payment.
Before moving further let’s discuss briefly these bridging loans so that we can understand more clearly. These are short-term secured loans where you can get the necessary finance to meet your immediate requirements, with the expectation that you can pay back the loan through some other source, which will be available to you sooner or later. This short-term loan will just bridge the gap between two important transactions.
Source: loanstreet.com
Following are a few benefits of this kind of short-term bridging loan:
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You don’t need to wait for money to buy
In the property market more you wait for the more opportunities you miss out. However, in order to make an immediate decision, you need to have cash readily available, so that you can close the deal. Bridging loans, therefore, can tie this gap and can be easily approved by a lender if you offer your existing house as security. You can then acquire your new property and move there. Therefore, while seeking such a loan you need to plan for the following:
- You must have a realistic time frame to sell your old property so that you can clear your loan
- You must set a realistic goal for a selling price of your old property
1. You can save the cost of two movements
In case you sell your old house before and then look for new property to buy, then till you find your new home, you have to move to some rented accommodation for a certain duration. After you buy your new property, you again have to move to your new home. In this way, you end up spending for two movements and also pay rent during the waiting period. By availing the bridging loan, you can save these unnecessary expenses.
2. Get a standard interest rate
The rate of interest charged by most of the money lenders are more or less the same as any conventional home loan, and hence you do not have to bear a high rate of interest. However, few lenders may charge a little higher rate of interest, and hence you must do some research, before applying for a loan.
Source: Andrew Duncan
3. Same home loan fees
You don’t need to worry about higher loan fees as they are almost the same as any standard home loans.
4. Get the opportunity to reduce interest bill
If you can carefully manage the repayment of the loan, then you can reduce your interest bills, too.
