By: Sarah Conner Published: Monday, May 03, 2010

Bridging loans can relieve people from the nightmares of selling their old property for purchasing a new one as these are used for bridging the cash gap that one is left with in such processes. But these loans are comparatively more expensive than other loans so you shouldn’t go for Bridging loans unless this is the last resort for you. These loans are designed for this purpose only so that people can save their deals for new property and already invested money in that one as well as to get extra time for selling the old one. Despite of being expensive, Bridging loans are considered to be friendly as these loans bring a stress free sleep for people.

There are mainly two types of Bridging loans such as ‘closed’ bridge and ‘open’ bridge. Both of them are secured loans and demand some security (property) against money. Closed one are for those people who lend money for particular timeframe while open Bridging loans are for those who are not certain about the time limit. These loans are short term loans that can vary from 2 weeks to 3 years and the interest rates can be 12-15%. Loan-to-value ratio can be maximum 65% for commercial and 80% for residential property.

Banks usually do not approve Bridging loans to everyone as this process demands lots of documentation work and many people would not be able to afford the complete documentation. So there are other money lenders who provide Bridging loans but in return they may want to keep old and new properties as security. That’s why these loans could be the last option if you want to buy a property. One should make it sure that how much time it is going to take to sell old property it can help him/her to save lots of money as well as can relieve from extra burden of interest. Bridging loans are for those who really need these loans.

This is a very good method to fulfill your dream to get your dream property quickly but it should not be forgotten that your property is still not yours completely unless you do not pay-off Bridging loans. Few people try to use these loans unnecessarily and they may have to face big financial crisis. On the other hand, there are people who have found their favorite property with the help of Bridging loans.

About Author: Sarah Conner is Financial Consultant for Chums Finance UK, Please visit the best option for Bridging Loans, House For Sale.

Category: Bridging Loans

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