Tuesday, May 19, 2015, AM | Leave Comment
Now that they’ve become popular, bridging loans are being used more and more by every day normal people who are looking for quick money. They’re no longer only designed for landlords and property owners who need money while they’re waiting for a sale to close or fees to come through and be released.
They’re quicker and easier to get than other loans from the bank, due to the reluctance to lend money out in the current economy.
With them, however, comes terms that the average borrower needs to be aware of, including the advantages and disadvantages of these schemes.
Quicker processing times
Short repayment terms
Bridging loans for property purchase can range from small amounts to millions as in some case commercial properties are involved.
They aren’t capped at a limit like some bank loans and they’re based off your needs and what you’re able to repay back to them.
When it comes to funding expensive properties such as commercial properties and offices its best to apply for a large bridging loan via a broker that will do all the legwork for you and find the right lender.
Due to the need of the money quickly, the application process once you’ve applied is generally much quicker than if you were to apply for a standard bank loans.
They come through faster and you get an answer a lot quicker than you usually would. The funds are almost immediately available to you, too, due to the need to move quickly when dealing with property purchases.
Bridging loans are designed to ‘bridge’ the gap between money needing to go out and money coming in.
For this reason, the loans that you take out are usually due to be repaid on a short term basis – this can range from a day through to a couple of months.
This means that the debt is not on your credit file for long and you don’t have to worry about having to still be remaking payments in a few years’ time just to secure a property.
High interest rates
Risky without an exit plan
Bridging loans tend to have high interest rates due to them being short term. Depending on the amount that you borrow, the interest rates can range from around 0.75% through to 1.5% – or potentially more depending on the lender that you use. This can amp up how much you’re paying back monthly.
If you’re using a bridging loan for quick access to money, you need to make sure you know exactly how you’re going to pay them back.
Without this, you can end up paying a lot more than you initially thought.
It’s also a secured loan, which means that if it gets out of hand, you’ll find it very hard to find a scheme or plan that will be able to help you manage the payments and freeze any interest.
With the loans comes fees – these fees are usually based on the provider that you use and are classed as administration fees (or facility fees) and sound low.
However, due to the amount that you’re usually looking to lend from these, this can easily end up being in the thousands.Facebook.com/doable.finance