Last Updated on May 17, 2022 by James W
Many people find themselves in a situation where they have seen a new property that they would really love to purchase, but they still have their old property that hasn’t yet sold. The home that they are currently trying to sell is an attractive proposition for many would-be house buyers and so they know that the property will sell quickly enough in just a few weeks, but they are terrified that they might lose out on getting their dream property that is now currently available. Rather than take the chance on waiting for the mortgage to come through, many people take another option of a bridging loan that will help to finance the new property while the old property is still selling.
When you talk to the people at Ascot Bridging Finance, they will explain that you can get a bridging loan for a short term period to buy the new property and you can use the old property as collateral. What separates bridging loans from any other typical loans is that it is a large sum of money that you only need for a short period of time and you only pay interest on the loan itself. It is pretty easy to figure out how much money that you can borrow because all they do is take the value of the property that you intend to purchase and add it to the market price on your old property. It offers many benefits and the following are just some of those.
? To buy a new property – The difficulty here is that you want to buy a new property even though you haven’t sold your existing one. In the normal scheme of things, you would try to sell your current property and hope that the property that you have your eye on that you would wish to buy, will still be there when all of the paperwork is signed and everything is agreed by the various lending institutions. Some people don’t want to take the risk and to wait this long and so a bridging loan is perfect for a situation such as this.
? It is interest only – This is a fantastic selling point because when you take out a bridging loan it is an interest only structure and so this takes away the cost ambiguity and you know exactly how much you’re going to be paying over the short period of time. This allows you to budget yourself better and it is much more manageable.
? Similar costs – Like any loan, there are costs associated with it and the good news is that the rates that apply to a bridging loan are on an equal par with a traditional home loan that you would normally apply for. This means that you’re not paying extra money for this particular loan.
If you are looking for very short term financing then a bridging loan is an excellent choice and a decision can be made in only a few hours or at the very most, a few days or weeks.
