You might be caught in a financial gap due to which you are unable to buy your dream house even after having found it. If such is the case, you can apply for a bridging loan. A bridging loan helps to secure the new property even if the old one is not sold already. However, a bridging loan can also be problematic in certain circumstances. Here are some tips to guide you on the benefits and shortfalls of using a bridging loan.
The benefit of bridging finance is that it helps you to buy a new property of your interest straight away, even if the old property is not sold in time. It is beneficial as you won’t miss out your dream property due to financial gap. The loan is secured against property, so even people with poor credit can borrow such a loan. These loans are extremely flexible and can help you secure a new property quickly.
The shortfall of bridging loan is that it is a short term loan. Therefore the interest rates are also higher. It can become a financial burden for you as you have to pay a higher rate of interest and that too within a short period of time. Repayment of the bridging finance can also become a problem for you if you are not able to sell your old property. Therefore you need to think carefully before taking out a bridging loan.
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