Large bridging loans are basically short term loans that people can easily get for buying a house prior to selling their existing homes or properties. These loans are so called because they help in bridging the gap that exists between the selling price of a new home and the new mortgage which has been taken on the home. The main purpose of these loans is providing required finance for ensuring that the procedure of purchasing a home goes on in a smooth manner. Thus, it can rightly be said, that these loans help in saving a good amount of money but taking these loans can be a little expensive initially. These loans are available for a period of twelve to thirty-six months and are tied to equities of existing homes. These loans also come with very high rates of interest.
How does this Type of Loan Work?
A large bridging loan is used in a typical situation when the buyer waits for the old home to be sold off and has already taken a loan for buying a new home. Nevertheless, the amount of the loan cannot finance the new home purchase fully and there is some money required. This need for extra money is filled by the large bridging loan. The money obtained through large bridging loan is effectively used in the form of down payment for new loan. Once the old property is successfully sold, the money can effectively be used for paying off the entire bridge loan amount.
The Right Candidates
The large bridging loans are aimed towards helping the landlords and the property developers in place of common people. However, recently, these loans have become quite popular because of the financial crisis which has forced the financial institutions and the banks to refuse the requests of offering large home loans. These loans can mainly be used by people who seem to be quite wealthy and are in need of straightforward loans on residential properties. These loans are highly useful for the people who are looking forward to selling off their properties quickly and purchasing new properties at auctions.
There are a number of benefits that can be fetched from bridge loans and they are as follows:
- Repayments on these loans do not start as soon as these loans are taken. Borrowers can easily wait for two or three months prior to starting with the repayments.
- The borrowers do not need to qualify for any eligibility criteria for getting bridge loans.
- These loans get processed very fast and this is something very advantageous for the borrowers because time is important when finalizing the deal for a new property. thus, in a way, these loans help in delaying situations that arise due to subject of sale problems and the lengthy waiting time in obtaining an outstanding property.
- Borrowers can easily request for their bridging loans to be covered into regular mortgages at a later date. This way the borrowers avoid the need of going to some other lender for getting mortgages for new homes.
Large bridging loans are also highly beneficial for the owners of large organizations who generally find themselves in difficult financial situations.