Bridging Loans Explained

Published on: 07 May 2021 Last Updated on: 02 January 2025

Bridging loans have become popular among borrowers for all the right reasons. With everyone talking about bridging loans, including the mainstream media, the chances are that you have already heard of these loans before.

This is especially true if you are trying to move houses. However, several people do not know what a bridging loan is and how it works.

Taking a bridging loan could be the best thing to do if you have found a dream house you want to acquire before someone else buys it, and you are yet to find a buyer for your existing home, which still has a mortgage.

A bridging loan will give you the funds you need to buy the second house as you wait to sell the current one. Even so, there is so much more to bridging loans than you might imagine.

In this guide, we will discuss everything about bridging loans from the basics, pros, and cons. keep reading to discover everything you need to know about bridging loans.

So what exactly is a Bridging Loan?

Simply put, a bridging loan is a short-term loan taken on top of the current home loan. As the name suggests, a bridging loan is usually taken when you need to buy a new house immediately before selling your existing home. When you take this loan, you will be paying interest on two loans.

To put things into perspective, bridging loans are a form of interest-only loans.

The value of your existing property will determine the value of the loan. It is also vital to note that these loans have limited terms and contain special concerns. Depending on the lender, the amount and terms of the loan will vary. You can view this bridging loan calculator first before you apply for the loan to get a glimpse of your financial responsibilities.

The structure of bridging loans differs from one private money lender to another. Some private lending providers will require you to continue serving your loan until you settle in your new property. The private finance providers will the interest of your two loans together during the loan duration.

Once you find a buyer for your second property, the mortgage will be discharged. You will then start paying the principal and interest of your current loan. On the other hand, other private lending providers will ask you to service both loans after taking a new one.

After the sale of your home, the initial mortgage will be discharged, while the bridging loan might be converted into the home of your choice for your new property.

When taking a bridging loan, it would help to think about compounding interest because you will be charged for both loans. Always keep in mind that you will end up paying more than you should if you fail to find a buyer for your house quickly. Bridging loan interests are calculated daily and charged monthly.

Another key element you should have in mind is the duration of the bridging loan. These loans usually last around six months to 12 months, depending on the private finance providers and your preferences. Your loan length will be six months if you buy an existing home and 12 months for a new one.

What are the Pros and Cons of a Bridging Loan?

Now that you are aware of what a bridging loan is and how it functions, it is time to look at the pros and cons. Understanding the benefits of these loans and the challenges you are likely to encounter when you take a bridge loan will help you make the right decisions. Here are the pros and cons of a bridging loan:

The Benefits of a Bridging Loan:

Bridging loans have so much to offer. It is crucial to understand what you should expect with this type of loan to get the best options. Here are the pros of bridging loans:

More Convenience:

Do you want to buy your dream home quickly? A bridging loan will allow you to do just that even if you have not sold your existing house just yet.

Flexible Repayments:

Depending on your bridging loan structure, you will only have to service your existing home loan finance when you take a bridging loan.

Avoid Further Expenses:

You will not have to rent when you take a bridging loan. It will allow you to move even if you do not have a buyer for your house.

Considerations of a Bridging Loan:

Like is the case with any other type of loan, bridging loans also have their fair share of cons. For instance, you will be forced to pay more if you fail to sell your house as soon as possible.

Choosing the Best Bridging Loans for Your Needs:

Bridging loans are categorized as open bridging loans and closed bridging loans. Closed bridging loans have a pre-determined settlement date while open bridging loans do not have an agreed settlement date.

When looking for a bridging loan, it will help to consider the duration, interest rates, and loan structure. It would also help to compare alternative loans before making the final decision.

Above all, it is essential to find the right private lending company. Fortunately, you can use an easy-to-use online platform such as ADS.finance to find the best private finance option near you.

Read Also:

Content Rally

Content Rally wrapped around an online publication where you can publish your own intellectuals. It is a publishing platform designed to make great stories by content creators. This is your era, your place to be online. So come forward share your views, thoughts and ideas via Content Rally.

View all posts

5 Awesome Advantages of Buying a Smaller House

Bigger isn't always better--as the owners of giant houses will tell you when the energy bill comes around. But there's a lot more to love about buying a smaller house than lower energy bills (though it's a major perk). If you've ever wondered if there's a brighter side to living less luxuriously, this article will help you explore just that. Continue reading to learn why you should consider downsizing in the near future to be happier: Why Buying a Smaller House is a Big Win 1. Lower Energy Bills : Whether you're in a mansion on Long Island or a Ranch home in Texas, your body will demand comfortable temperatures year-round. Seasonal temperature swings like harsh summers and winters mean heating and cooling systems will have to work harder, using more energy. And that equals a steeper energy bill. Big rooms and vaulted ceilings pose a problem: the time it takes to alter all that air temperature requires much more energy than compact homes. 2. Less House to Clean : A smaller house inevitably means smaller piles of dirt, smaller dust bunnies, fewer floors to mop and less carpet to vacuum. With fewer rooms, daily chores and tasks aren't nearly as burdensome or demanding, freeing up time and a lot of peace. You'll also save money on various cleaning costs, from paid cleaning services to scrubbing materials. 3. Reducing or Eliminating Mortgage Payments : A house at $200,000 today (an average price) will cost someone on a 30-year mortgage a little over a thousand dollars a month. At that price tag, these houses are likely to have only a couple of rooms and moderate square footage. When you're considering a house with 4-5 bedrooms in a highly desirable area, don't be surprised to encounter a mountainous mortgage. Downgrading is likely to put a hefty amount of cashback into your pocket after mortgage payments are processed each month. 4. Helping Purge Junk : Having less stuff seems to equal happier living as there are fewer things to fret over, fewer things to purchase, fewer to clean up. When downsizing homes, it's easy to rummage through your belongings and separate out what you won't need. From there, you'll have fewer things to worry about when moving into your smaller home. Regardless, however, you should seek out quality moving services, such as Corrigan Moving, to secure your belongings in the process. 5. Frees Up Time Commitments : There's no currency like time, and if you're looking for more of it, then downsizing to a smaller home is your ticket to the good life. As we mentioned, cutting down on the amount of cleaning will cut out wasted time. A smaller yard will need less work, and a smaller pool won't require as much scrubbing. Choosing a smaller home will generally require less maintenance time, giving you back the freedom of a wider available schedule. Why Wait to Downsize? The buyer's market is ripe with opportunity, and downsizing has never been more rewarding than in our digital age! Buying a smaller house proves to be a wise decision on funds and time, and a strong move toward a happier life. For more practical and insightful information, visit Content Rally today! Read Also : Best Home Buying Tips For First Time Buyers Buying Or Selling A Home In Seattle? Buying Your First Home In St. Louis

Choosing the Right Real Estate Landscape in Worcester

The process of buying or selling a property can be both exciting and challenging, especially in a city as vibrant as Worcester. Whether you are a first-time buyer, a seasoned property investor, or someone looking to sell their home, choosing the right estate agent is a critical decision. Additionally, understanding the current market and available properties for sale in Worcester is equally important. In this comprehensive guide, we'll explore how to choose the right estate agents in Worcester and delve into the diverse array of properties available in this historic city. Choosing the Right Estate Agents in Worcester 1. Local Expertise Matters When selecting an estate agent, opt for one with a strong local presence and expertise in the Worcester property market. Local agents are well-versed in the nuances of the area, providing invaluable insights into property values, neighborhoods, and market trends. 2. Check Credentials and Reputation Research the credentials and reputation of potential estate agents. Look for accreditations, reviews from past clients, and any industry awards. A reputable estate agent with a solid track record is more likely to provide excellent service. 3. Tailored Services Consider estate agents that offer tailored services to meet your specific needs. Whether you're selling a property or searching for a new home, an agent who understands and accommodates your requirements will make the process smoother. Integrating a real estate agent CRM into their services ensures your unique needs are tracked and met with unparalleled attention to detail. 4. Transparent Fees Clearly understand the fee structure before committing to an estate agent. Look for transparency in fees and ensure that you are aware of any additional costs associated with their services. 5. Effective Communication Effective communication is key to a successful property transaction. Choose an estate agent who keeps you informed at every step of the process, providing updates on property viewings, offers, and negotiations. 6. Online Presence In today's digital age, a strong online presence is crucial. Evaluate an estate agent's website, online listings, and social media platforms. A well-maintained online presence reflects their commitment to marketing properties effectively. 7. Local Networks and Connections Estate agents with extensive local networks and connections can offer a competitive advantage. These connections can facilitate a smoother transaction process and provide access to off-market properties. Exploring Properties for Sale in Worcester Now that you understand how to choose the right estate agent, let's delve into the diverse range of properties for sale in Worcester. 1. Historic Charm in City Centre Worcester's city centre boasts a mix of historic and modern properties. From charming period houses along the River Severn to contemporary apartments, there's something for everyone in the heart of the city. 2. Peaceful Suburban Living If you prefer a more tranquil setting, Worcester's suburban areas offer a variety of family homes, often with larger gardens and proximity to reputable schools. 3. Riverside Retreats Properties along the scenic River Severn provide a unique and picturesque lifestyle. Riverside homes offer beautiful views and a peaceful ambiance while remaining conveniently close to the city centre. 4. Period Properties with Character Worcester is home to a range of period properties, including Tudor-style houses and Georgian residences. These homes exude character and charm, often featuring original architectural details. 5. Modern Developments For those seeking modern amenities, Worcester has seen the development of contemporary housing estates. These properties often come equipped with the latest conveniences and energy-efficient features. 6. Accessible Transportation Hubs Consider properties with easy access to transportation hubs, such as Worcester's two railway stations. Proximity to public transport can enhance convenience for daily commuting. 7. Potential for Investment Worcester's property market offers potential for investment, with a variety of properties suitable for buy-to-let opportunities. Conduct thorough research and work with your chosen estate agent to identify properties with good investment potential. Conclusion Choosing the right estate agents in Worcester and navigating the diverse properties for sale requires careful consideration and research. Whether you're drawn to the historic charm of the city centre, the tranquility of suburban living, or the riverside retreats along the Severn, Worcester has a property to suit every taste and lifestyle. By partnering with a knowledgeable and reputable estate agent, you can embark on your property journey with confidence, knowing that you have the expertise and support needed for a successful transaction in this captivating city. Read Also: Real Estate Agents In Dubai: Your Gateway To The Luxurious Property Market Your Toronto Real Estate Guide: Trends, Hot Spots And Key Players Wholesaling: Tips For Investors To Make It Big In Real Estate

Buying or Selling a Home in Seattle?

Regardless if you are new to the Seattle area or just looking to find a new place to live in the city you already love, buying a home is a big deal. You aren’t simply making a purchase, you are making an investment. An investment that by all means should end up being a part of your identity, a member of your family so to say. Read also: The Glitches Arrived In Travelling To New Place Why Seattle is the place to be Seattle has become one of the most popular places to live in the Northwest. Despite what you have heard about the weather, there are plenty of cities throughout the United States that accumulate more rainfall than the Emerald City. New York City, Jacksonville, Raleigh, and Hartford are just a few that might catch you by surprise. There are several parks and scenic getaways throughout Seattle to escape the hustle and bustle of busy city life. A weekend mountain getaway is just a matter of thirty minutes away. If that isn’t enough to talk you into making the move, you are always just a block away from the best cup of coffee you have ever had. Because of these factors and many more, there has been a significant rise in the price of houses on the market in the area. Because of this, realtor services such as Findourpad have distinct advantages over trying to find a home on your own. This particular service will update all of the current listings throughout the Seattle area as often as every 15 minutes. Easy to access information They make it easy to find a home matching exactly what you are looking for when it comes to area, price, and size. Trying to find this information on your own would take days, if not weeks. By being able to see current listings, images, and details at the palm of your hand, you save yourself valuable time over visiting site after site, looking for the perfect match. Services such as Findourpad allow you to compare listing on the market in different areas, by different realtors. You have the ability to compare how much home you are getting for your dollar compared to other options, providing you the opportunity to find exactly what you and your family are looking for. You will have information at your fingertips concerning the type of view from the home you will enjoy, the school district your children will attend, the annual amount that has been spent on taxes for the property, even the type of vehicle parking the home provides. With the simple click of the mouse, you can request even more information about the home or schedule a viewing to see the place for yourself. If you are currently or will soon be selling a house, the service can be just as valuable for you, if not more. By listing your home on the website, you will put it in front of thousands of eyes that may not be able to see the property otherwise. Regardless of which end of the market you are in, Findourpad makes the task of buying or selling a home much easier for everyone involved. Read also: Why Should You Consider Security Doors For Your House?

Bridging Loans Explained

So what exactly is a Bridging Loan?

What are the Pros and Cons of a Bridging Loan?