Bridging Loan | Finance Bridging | Bridging Loans | Bridging Finance Commercial

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Bridging Loan | Finance Bridging | Bridging Loans | Bridging Finance

A Bridging Loan is a short-term loan that can be used, as the name suggests, to bridge the gap and overcome a temporary financial deficit. Such a deficit might occur during the sale of your home or a piece of property, for instance, your old home has not sold and you need capital to secure your new home. In this case, you could use a bridging loan.

A bridging loan is also thought of as a short-term loan, or a very short-term mortgage. This loan is secured against property, meaning that if you do not make the payments, then the lender will seize the property you used as collateral to secure the loan.

Bridging loans tend to have higher interest rates than other regular mortgages, due to the amount of risk for the lender and other factors. To find out what you might pay for a bridging loan, you might seek out a bridging loan calculator online. With a few bits of information, you can use a bridging loan calculator to estimate what you might pay to see if that loan would be an affordable option for you.

The term of a bridging loan usually lasts about six months, so you must be very sure of your ability to repay the loan in that time. Again, you can lose property if you default on this loan. Depending on how much you owe, you could even lose more than one piece of property. These loans are more accessible options for people with bad credit, or are self-employed, who otherwise may not qualify for any other loans.

The amount of the bridging loan depends on the value of the collateral, and the lender will have someone do an appraisal to determine this value. Normally the bridging loan will cover up to 65% of the value of the collateral, less any other amount you may owe the lender. For example, if the collateral is worth £100,000, the bridging loan would be about £65,000 (at 65% the value). The percentage value will depend on the particular lender, however, and it is possible to get a better loan-to-value ratio.

Bridging loans usually range from £500,000 to £5,000,000, and depending on the lender and special circumstances, a bigger loan may be arranged, with more time. A bridging loan has a monthly percentage rate, which is an agreed upon set interest rate for the duration of the loan.

If you can, you should check around for the best interest rate. However, depending on the circumstances, if you need a bridging loan, likely time is an issue and you will go with the lender who can get everything together the quickest. If you can, though, you should try to check out the rates of the other lenders to make sure you aren't paying too much. Do remember however that if you're self-employed or have less than decent credit, you will probably end up with a higher interest rate anyway.

Bridging Loan | Finance Bridging | Bridging Loans | Bridging Finance Commercial

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