How To Secure a Bridging Loan

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bridging loan

Bridging loans can come in handy if you need that extra finance for a short period of time, usually during a gap between buying and selling your property.

Not difficult to arrange, you will normally need to satisfy the lender that you are well into the process of buying your new property, and that you are selling your existing property.

Lenders will be interested in the security that you can put up against the loan and will want to know how you will be able to pay off the loan, especially should your sale fall through and you need to service the loan for longer than you planned. If you are looking for a bridging loan and would like more information about it, check out our website at https://hotklix.com/

How to obtain your bridging loan

1) Think before you leap – Using a bridging loan to buy your home can be very risky and great care is needed to ensure you don’t end up making a costly mistake that you will regret. You should always use an experienced mortgage advisor who can give you sound advice and who can help you understand the risks involved. Bridging loans are not regulated by the Financial Services Authority, so you will have no recourse to the regulator if things go wrong.

2) Shop around – Many high street banks and building societies can help you with getting a bridging loan, as well as a large number of financial companies. Agencies can obtain a bridging loan that is suitable for your needs, acting as an intermediary between the banks and the customer. In these cases, terms will vary depending on the bank they use. If you need something very short term and are sure that you can repay the loan quickly, you might want to go for a higher rate of interest and low application charge which is usually a percentage of the value of the loan.

If you are looking to raise finance from a bridging loan quickly, it is worth shopping around for companies that can process your application and get the finance to you without delay. Fast bridging loans normally can be secured against any kind of home, land or business property on a first or second-charge basis, which means funds, can be secured on the property being bought. (A loan that is secured against a mortgaged property is referred to as a second charge, while a loan secured against a property that is owned outright and has no existing mortgage is known as a first charge. Visit https://commentsdb.com/ for additional details on how to apply for your bridging loan.

3) Understand what you are getting into – An advisor will sit down and discuss with you the details of the loan, explaining the risks, charges, interest and all of the terms and conditions. Some companies will ignore previous credit history but in general, they will be interested in how you expect to be able to service the loan. If you have to pay off two loans at the same time for longer than you planned, how will you manage?

Different companies will have different requirements. For example, they might state a minimum and maximum size loan, a maximum loan-to-value ratio (typically 75%-80% for residential properties and a bit less for commercial properties). With additional security, you might be able to borrow up to 100% of the market value of the secured property, however. Loans are usually available for any period of time up to a year.

4) Security – You will usually need security before the loan can be approved. The lender will need to be satisfied that there is enough security in the property that you are using to back the loan. They will also want to be sure that you will be able to repay the loan, whether from the proceeds of sale or refinancing if you are looking at improving the property.

The decision to give a bridging loan is usually very quick – within a day or so. Approval of the loan is not based on your credit rating, so even if the applicant has any credit issues, they are still likely to be able to obtain the loan.

Conclusion

To secure your bridging loan, you need to talk to a lender that you think will serve your interests the best and discuss your requirements with them. You may not always be able to get what you want as the loan will be based on the value of the properties involved. You can either use your local bank or a specialist loan lender. The rates are high and there are varying amounts of application or set-up fees, so shopping around is always a good idea.

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