Deadlines, in case of property purchase, are strict; and ones plan of owning a house is made or marred, according to his capability to stick to these deadlines. Property deals are often prolonged. When individuals promise on the basis of expected results of a deal, they may find themselves into a tight spot. For instance, when a person promises to pay for a new house through the sale proceeds of old home, he has to wait for the old home to be sold. A solution to this financial dilemma can be sought in fast bridging loans. Through fast bridging loans, borrowers can get the requisite sum within 5 working days of application. Regular loans would not have been so fast in approval. Several weeks elapse before the news of approval reach the borrower. If borrower thinks of meeting deadlines through regular loans, he better be cautioned. Nothing but a fast bridging loan can raise cash in so short a period. A distinct feature of the customers availing of fast bridging loans is that they are not cash strapped. Availability of cash at that particular point of time however is the major issue. Like in the case of persons planning to buy a new home, most resources are locked in the older home. Therefore, as long as the older home isnt sold, ones plans of purchasing the other would have to be shelved. This distinct feature has an important bearing on the manner in which bridging loans are designed. It is expected that the individual will sell his old house and recover the sale proceeds within a small time. If certain individuals have their hopes pinned on a consignment to be received by consignee, it is expected that the proceeds will be received within a small time. Therefore, repayment of bridging loan is also fixed within a small time, which is as soon as the likely results become due. Therefore, fast bridging loans need to be repaid over a period not exceeding 12 months. However, if borrowers want, they can repay bridging loan earlier if they are in possession of the requisite sum. The high rate of interest will validate ones decision to pay the loan promptly. The larger is the repayment term extended, the greater is the interest cost. Therefore, in order to keep interest costs in manageable limits, it will advisable to repay fast. Through bridging loans, borrowers can expect loan assistance up to 500,000. The minimum level exists at 25,000. This is the standard amount, and loan providers can be induced into approving a larger sum. Different factors come into play in the loan decision. Though credit history is not very important in the approval decision, it will surely play an important role in qualifying for a larger amount. As applicable in most loans, borrowers are not able to convert the entire available equity into loan. Similarly, bridging loans allow borrowers to qualify for as much as 65% (average) of the available equity. The fees of valuer will have to be borne by the borrower himself. Why is the rate of interest higher in case of bridging loans? Short-term loans are characteristically expensive in terms of rate of interest. Since bridging loans are short-term loans, one of the reasons for increased rate of interest can be attributed to this phenomenon. In bridging loans, a mortgage is secured on the new property and a second mortgage is secured on the property being sold. This also results in increased risk. Therefore, borrower will have to again pay a rate of interest, which is expensive by few more points. This is one of the chief drawbacks of fast bridging loans. Apart from this and having made good provisions for the increased interest payments, borrowers will seldom find loan assistance as appropriate as fast bridging loans. |
