Bridging Loans

A Bridging Loan is also known as a short-term mortgage. This type of loan is most often used to cover temporary financial problems during property purchases. These types of loans are best for the people who are buying a new home but have not yet sold their old one and thus they need short term finance to allow them to go ahead. More interestingly, Bridging Loans can also be used by the business community. Some people also use these types of financial aids to cover large and unexpected expenses.

Not to mention, Bridging Loan amounts will vary depending on your own needs, income and on the lender you choose. Most of the time these loans involve securing either the full purchase of an additional property or giving you sufficient finance to make up the sums you need. Bridging Loans are usually of relatively high value. The amount of the loan depends on the lenders while generally specialists will not provide the full value of your property and may cap their loan at up to 70% of its worth. As Bridging Loans are Secured Loans, therefore, the borrower has to place collateral against the loan amount and as obvious, the loan amount also depends upon the value of the collateral property placed.

Following are the different types of properties that can be used as the collateral against a Bridging Loan:

Residential properties
Commercial plots or Semi-commercial properties
Auction properties
Retail shops
Development sites

As mentioned earlier, Bridging Loans are generally used as short term financial problems so it can be taken out for as little as a week. It is very uncommon to find such loans for a period of more than six months but if you wish, you can negotiate the deals for longer periods as well.

The main disadvantage of a Bridging Loan is that you will find it at a much higher rates than other types of property loans. Sometimes your lender may charge monthly interest rates rather than annual ones so the longer you need the bridging loan, the more you'll have to pay. In fact, the interest rates here are much higher than regular mortgage loans.

Some Important Links : Commercial Property, Credit Cards.