When purchasing a new property, you need to put in the money for a down payment. You might have applied for a mortgage but it will take 90 days to come through. In the meantime, you will want to move into the new property, but your existing property is yet to be sold. How will you meet the down payment and do this? Apply for a bridging loan.

How Can A Bridging Loan Assist You?

Short term bridging loans were once used by property developers and landlords, but they are now gaining popularity with home buyers. The reason for this is that they are easy to obtain. The loan application process can be completed quickly and the loan amount is credited to your account in a short while. This helps to quickly proceed with purchasing a new home by making the down payment. This way you don’t have to lose out on getting an attractive property because of the lack of a small amount of money needed to make the down payment. This loan has a short duration and so repayment will be completed quickly. Unlike a home mortgage, it will not carry on for a period of 15 to 20 years. The minimum loan duration is 2 months and the maximum is three years.

If your existing home is going to be sold within the next six months, you can inform the lender that you will start making repayments on the bridging loan after this period. You can also opt to pay interest plus entire loan amount after six months. If the home sale occurs earlier you can settle the loan amount faster and avoid having to pay interest. It is to be noted that this loan carries a high rate of interest so it is better to repay sooner than later. Since you can defer payment for some time, until the sale of your property happens, there is no need to hurry up with a sale. You can wait until a buyer offering a good price arrives and then complete the sale.

Short term bridging loans are what market savvy home buyers opt when they need to close the deal on an attractive property. They can get the dream property they want, in the price that is most optimal for them by using this loan to make the down payment. Without this loan, it is not possible to get the property on time. Lenders also offer this loan to cover the mortgage of an existing home. So if a buyer wants to sell their home property and buy a new one, but the old one still has pending mortgage payments, this loan can be used to finish those payments. This takes away the burden of having to pay loan plus interest on the old mortgage. When the property is sold the bridge loan can be repaid, which removes the need to spend money on it. All that the borrower now has to do is repay the loan and interest amount on the new home’s mortgage.