Bridging loan is a type of a nonstandard loan, which can be compared to a mortgage, taken for a short term. The borrower can be offered a large sum of money, from £25,000 to £500,000 million pounds. Larger amounts can also be borrowed, but it will take more time for their arrangement. Bridging loans are really expensive and should only be taken by those who are absolutely sure they will be able to repay them within the period of about six months.

Depending on the loan provider, such loans can be given to the self employed or individuals with bad credit. Putting it differently, to those consumers who usually have their applications for loans and mortgages rejected.

Bridging loans secured by real estate are usually not offered by many high-street banks because of numerous factors such as the speculative nature, incurred risk, incomplete documentation, etc. A bank that took the plunge of giving bridging loans might be forced to justify its lending practice to its investors and to the government. That is the reason why bridging loans are mostly offered by specialist bridging finance companies, individuals, investment pools, that are ready to take the risk for the profits they give.

Even though bridging loan is very convenient and can be easily obtained, some lenders can avail themselves of the urgency factor of the borrower. Thus, the the punitive expensive rates on the loan should be checked in the first place by anyone thinking about taking a bridging loan.

If you have chosen the option of a bridging loan, you need to be aware of the fact that like in the case of a mortgage, you offer your estate to secure this loan. Therefore, you need to be very careful with the paybacks. If you are let down by your purchaser, you may have to sell your newly acquired home to liquidate your bridging loan. What is more, you could also pay for all the legal costs from purchasing and selling your houses, along with the interest you will be obliged to pay on the loan before you have to pay it back.


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