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Overseas loans for australians
A bridging loan as the name implies
is a loan used to “bridge” the financial gap between monies
required for your new property completion prior to your existing
property having been sold.
A bridging loan is in simple terms a short-term mortgage
that is secured against the property that you are selling, with
the money that is lent being used to complete the purchase of the
new property. Because of the nature of their use, bridging loans
can be arranged in a very short period of time, usually around seven
to ten days, which is important when you need to complete on the
purchase or risk loosing the property.
Bridging loans are short term loans arranged when
you need to purchase a house but are unable to arrange the mortgage
for some reason, such as there is a delay in selling your existing
property. Timing is of the essence when selling one property and
buying another. Sometimes if you are looking for a new home and
the right property becomes available, it is not always possible
to wait until your current home is sold.
The beauty of bridging loans is that a bridging loan
can be used to cover the financial gap when buying one property
before the existing one is sold. For example, if you are in a chain,
where you are buying a property at the same time as selling a property,
it's possible that you'll be put in the situation where you need
to complete your purchase, but the funds from your buyer are not
available. You are now under pressure to complete on a particular
date but do not have the funds available. This is where bridging
loans come in. They are looked on as short term lending to cover
a specific short term need.
Bridging loans can be arranged for any sum between
£25000 to a few million pounds and can be borrowed for periods
from a week to up to six months. Because of the nature of bridging
loans they can usually be arranged at short notice and within a
few days. Bridging loans are widely available and can usually be
arranged by your existing mortgage provider.
A bridging loan is similar to a mortgage where the
amount borrowed is secured on your home but the advantage of a mortgage
is that it attracts a much lower interest rate. While bridging loans
are convenient the interest rates can be very high. When considering
a bridging loan please remember that you may be paying not only
for the bridging loan but also for the mortgage on your existing
property. Although bridging loans are convenient, you need to consider
the pitfalls too, like the high interest rates.
The downside to the fast nature of these types of
loan is that the interest rates charged on them are relatively high,
this is because not only are they short-term and for large amounts,
but the risks to the lenders of non-payment are higher than for
other circumstances and this is taken into account when the loan
rates are calculated. Although the rates are high when compared
to other loans available on the market, when you take into account
the short amount of time over which this interest is charged, and
the benefits that a bridging loan can bring, the costs are reasonable.
Bridging loans are designed to provide you with the
equity from your current home in order to make your new purchase,
before you are able to sell your own property. The loan is secured
against the home that you are selling in the form of a mortgage
or second mortgage, and will allow you in general to release around
65% of the property's value. With these funds you are then in a
position to complete the purchase of the new property, and once
your old property sells you can clear the bridging loan. If you
are considering such a loan, you should be confident of a sale,
and that you will be able to clear the debt within six months, as
the high interest rates are something that you do not want to be
paying long-term.
Bridging loans are available to the people that have
found it more difficult to get mortgages, such as those with an
adverse credit rating. This enables these people to build a track
record before applying for the traditional mortgage. Bridging loans
can take from 48 hours at the shortest to around ten days if the
circumstances are more complex.
Despite the costs, bridging loans are very popular,
after all if you have spent a lot of time searching for the perfect
property you will not want to miss out on it because of a relatively
short delay in the sale of your current property. It is in these
cases where bridging loans can prove invaluable, enabling you to
secure the sale of the home that you want, and concentrate on the
sale of your property at a later date.
Bridging loans can be provided for:
Residential property
Commercial property
Land
New build
Renovations or refurbishment
Speculative properties
Conversions
Overseas property
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