Learn the bridging loans definition and the purpose, audience and timing of these special method of financing provided to bank customers.
The Bridging Loans Definition
People consider a bridging loan a short-term funding option. As the name suggests, bridging loans are used to bridge an existing gap between debt coming due, primarily property transactions and the credit becoming available and which is the main transaction. In other words, this is a type of loan taken under pressing issue circumstances. The following is a guide to bridging loans:
What is a bridging loan purpose?
This type of loan is meant to help people complete a property purchase before they resort to selling their home. As such they receive access to money within a short period of time. Of course, funding in this way is at very high rate of interest.
On the other hand, these types of loans help people who are relocating. This is when there is a slight difference between the completion and commencement dates in a row. This type of a loan can also be of great help to people who are on a quick sell-on after home renovation. It is a way also to help someone buy at an auction.
Who need bridging loans?
From one point of view, these types of loans target amateur property developers and landlords. Additionally, they are for those in auction competition who need mortgage urgently and within the shortest possible time. On the other hand, borrowers who are in need of a straightforward debt on residential properties can be good customers for bridging loans.
When should one use bridging loans?
People use this type of loan for a wide variety of reasons. These include property development, buy-to-let arrangements as well as investment. However, in recent time, there has been a development of a new trend among the borrowers to use these types of debts. This is because street and private loaners are taking long to make application processing for home loans. Hence, in this case, if you are looking forward to owning a home without the hustle of going through a million pieces of paperwork and a long waiting time, then it is high time for you to use this loan.