Bridging Loans

 


Visitors: 365

A couple of years ago my wife and I were in the process of selling our house. We were pretty sure we had found a buyer and had agreed on a price acceptable to both them, and us but they wouldn’t be able to buy our house for about three months. My wife and I were totally ok with this since we weren’t in any particular hurry to move, we just wanted to move into a bigger home outside of town, somewhere a bit more rural.

Well, one weekend while we were driving around the countryside looking at houses, we saw the perfect farmhouse. It was exactly what we were looking for. Not too far out of town, on a quiet road, overlooking a little lake and surrounded by tall oak trees. In short it was perfect.

We contacted the selling agent and found out that the price was within our budget, but only just. We told him it would be three months before we’d be able to buy it and this caused him to pause. Apparently there was a lot of interest in that little house and he couldn’t justify delaying the sale for three months. So we let it go.

Why a Bridging Loan?

We did find another beautiful house so the story has a happy ending but is there anything we could have done to get that first house? The answer, had we known it at the time, would have been a bridging loan. Bridging loans are short-term loans offered by commercial lenders to borrowers for a specific purpose. They can range in time from two weeks, for a very short loan, to up to three years for commercial bridging loans. Homebuyers who have not yet sold their property and wish to buy require these bridging loans.

Interest Rates

The interest rates are probably higher than for your typical mortgage but this is because of the added flexibility and convenience you have from the lender. There will also be set up fees involved. However, they may work out at significantly cheaper than some of the alternatives such as renting accommodation. There will also be many situations in which the price will be well worth paying if it means getting your dream home.

You should always shop around before agreeing to a bridging loan as rates and fees can vary significantly. You don’t have to get it from your mortgage provider although there may be advantages to doing so.

Joseph Kenny is the webmaster of the loan information sites http://www.selectloans.co.uk/ and also http://www.ukpersonalloanstore.co.uk . At the Personal Loan Store you can find all the different loan types explained.

(483)

Article Source:


 
Rate this Article: 
 
Bridging Loans Explained
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

A comparison of bridging loans and bridging finance

by: Russ Svatt (March 04, 2011) 
(Finance/Commercial Loans)

Bridging Loans - Bridging the Distance Between You and Your Dreams

by: Samantha Bonsu (June 10, 2008) 
(Finance/Loans)

Bridging the Gap - through Bridging Loans

by: James Taylor (March 18, 2005) 
(Finance/Loans)

Bridging Loans UK

by: Jams William William (July 10, 2010) 
(Finance/Loans)

Bridging loans

by: Jams William William (June 23, 2010) 
(Finance/Loans)

Bridging Loans

by: Sam Hoban (August 25, 2010) 
(Finance/Loans)

UK Bridging Loans

by: Joseph Kocsis (September 27, 2006) 
(Real Estate)

The Benefits of Using Bridging Loans

by: Adam R. Singleton (May 28, 2009) 
(Finance/Loans)

Just What Are Commercial Bridging Loans?

by: Darren Horne (November 04, 2008) 
(Finance/Loans)

Bridging Loans Explained

by: Jason Hulott (July 04, 2007) 
(Finance/Loans)