A bridging loan is an arrangement where the borrower requires funding so as to purchase and sell a property simultaneously. To help its customers understand the concept http://www.1550loan.com/stigma-for-bridging-loans/ has introduced great services.

As the name suggests when an individual sell a property they are eligible for a certain sum of money. However, if they immediately purchase another property whose worth is more or less similar but requires some payment related to the closing costs, down payments; bridging loans comes into the picture and is meant to cover them.

Lenders who issue bridging loans do valuations for the property to be sold. Such loans are based on the property valuations and do not take into consideration the income to debt ratio of the borrower. Thus anyone who is having a bad credit and cannot take loans of large sums can easily go for the bridging loans.

Before opting for the bridging loans one ought to consider the different aspects of the loans, long term benefits and also the disadvantages associated with the loan. Bridging loans are often given for short durations only. Bridging loans do not require any upfront payments and waits for the old property to be sold for the repayment.

Most of the bridging loans are offered on the basis of an agreement which states that the loan amount will be recovered automatically by the sale of the property. However, if the borrower does not sell the property within the stipulated period, the loans are converted into a normal mode and the borrowers are required to make monthly repayments as per the terms agreed in the beginning.

There is a certain cost associated with the loans during the contingency period of the bridging loan. There is an amount of interest charged on the loan amount. This makes these loans costlier. However, for the fact that the loans are more accessible and the borrowers with different profiles and credit standing can avail the loans, the higher costs can still be looked into.

Let us look at the situations where the loan becomes helpful. Consider a case wherein the customers are required to a new place because of the job. One cannot sell their existing property in a single day and move to the new one. Real estate procedures are slow as they involve huge amounts of money. Thus one cannot estimate the real time within which a property can be sold. Bridging loan basically provides an option to purchase a new property and move into it while can repay the loan once the old property is sold.

Bridging loans are offered for a fixed period which ranges anywhere between 1 month to 2 years. This may vary between the lenders. During the course of the loan one requires to pay an interest. Thus one should try and sell the old property as soon as possible. The longer the length of the loan; the higher the amount one pays as interest. Moreover, one should consider the fact that when they purchase the new property using a bridging loan, the amount received for selling the old property should completely cover the bridging loan. In case there is a gap one must have the funds ready else they will need to partially repay the bridging loan and pay the rest amount along with the interest as a new loan.

Moving oneself while making a buying and selling decision at the same time can be a difficult affair. However, bridging loans make the process less cumbersome.

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