We Finance Loans

Not many people realize that when you purchase a property before disposing of your existing one, you are putting yourself in a great financial burden. There is a period of time where you are actually required to service two loans. A bridging loan can help ease the financial burden by providing a short term loan (up to 12 months) to bridge the gap between when you settle on the new home and when you dispose of the old home to discharge your old loan.

There are actually two types of bridging loans. Closed and Open. A closed bridging loan means that you have already sold you house and are just waiting for settlement and funds to clear before paying out your old loan. An open bridging loan means that you have not sold your house yet but are intending to do so within the set timeframe (up to 12 months).

Because bridging loans are essentially a sort of short term finance, the interest rates are comparatively higher than standard home loans. Of course, the best option is not have to use a bridging loan at all. To avoid this, make sure you have settled the sale of your existing house before finalizing the purchase of the new home. This is easier said than done. Having this kind of closure and defined cut off means that there is a period where you will not have a home. Even if you time the settlement on the same day, you will have to move your furniture and belongings all on the same day. This kind of timing is very uncommon and hard to juggle.

With the convenience of the internet these days, it is now much easier to find and compare bridging loans from the major banks and financial institutions. Not all Bridging Loans are made equal and as with all products, you will find that there is a large spread between interest rates charged by the lenders. Make sure you read all the fine print and fully understand what you are contracting yourself up to. When it comes to the substantial sums involved in property purchases, one mistake can be extremely costly.

Bridging loans are available to everyone – there is even bridging loans available to people with poor credit history and bad records. Shopping online can help you find the most competitive product and one that is tailored for your needs. Having a bad credit will mean that it may be slightly harder to find a willing lender and you will most likely have to pay a premium on the interest rates for the lender to take you on. This is why it is important to keep a clean record when it comes to your credit profile.