As the name suggests, bridging loan is a kind of financial aid given on a short-term basis, against any kind of property or land on legal grounds. This short-term funding option is designed in a beneficial manner to release finance with a legal procedure on flexible terms with lending criteria like commercial or residential property that includes plots and farms that are not mortgaged.
Bridging has proved to be beneficial for those who have failed against conventional mortgage lenders. The loan is given with a minimum term of 1 month and a maximum term of 24 months by the lenders.
What are the advantages of taking a bridging loan?
Bridging loans are beneficial for property professionals who wish to make use of purchasing opportunities to obtain a property through auction or on a private basis. It is generally obtained when the traditional lenders refuse to lend money against any property.
Bridging loan is also one of the business loans that are used to raise capital for the payment of taxes, for raising finance for the purchase of any important asset, for investments, etc. Some other uses of bridging loan are debt forgiveness deals, to avoid repossession, for business cash flow, purchase of property overseas, any kind of land acquisitions, and much more.
What is the minimum and maximum loan amount that can be borrowed?
The loan amount depends on various factors. However, the minimum amount could be £10000 and the maximum amount £15 million. The loan amount depends mostly on the current market value of the property.
The ratio of the loan size depends on the property value after which the exact loan value amount is obtained. Along with this, the ratio also depends on the purpose of the loan like residential or official.
Is it safe to take a bridging loan?
A bridging loan is a short term funding option that helps you to pay the mortgage amount until your current property is for sale. There are people who still feel insecure about bridging loan, which is not true. It is a secure way to get finance during a short period. The loan comes with various repayment options. It comes with an affordable and manageable interest rate that does not disturb the living of the borrower. It is a useful loan service that helps you meet your cash requirements in a trustworthy manner.
You must note that if you fail to repay the loan amount in the speculated time, the Company will take away your property in legal terms.
While opting for short-term function option, you need to pay the arrangement fees. Valuation fees will be included but if you have the valuation report, you do not have to pay the fee. Bridging loans do not come with an additional processing fee. You do not have to spend any penny when you are eligible for the loan.
Bridging loans are the best business loans option that comes with many facilities. It comes with an early repayment option that does not include any charge. Zero penalty is beneficial for businessmen who opt for this loan.
If you fail to pay the installments before the due date, the amount would be deducted from the initial advance paid by you. This amount would be credited back to your account as soon as you make the payment. The company would explain the repayment structure when you opt for this loan. In case you wish to repay the loan amount within the deadline, talk to your company to get accurate information about the payment.