A bridging loan may be negotiated to assist buyers to purchase another property before they have sold their own. It may be that someone has seen a house that they particularly like, offered for sale, but which is attractive to other prospective purchasers as well. In an endeavour to beat the opposition, they may be tempted to negotiate a bridge to enable them to make an offer, which might normally have had to wait, until they had sold their own property.
Bridging loans are not something that should be contemplated without serious consideration. They are usually provided by high street banks, and may be subject to higher interest rates and arrangement fees than those applied to normal mortgages. If the applicant then fails to sell their original property, within a reasonable time, they could become burdened with a level of total repayments that could cause them financial hardship. They would be liable for repayments on their original mortgage and on their bridging loan as well.
You can guess what could happen in a slow housing market. It would be a real worry if the original property was not sold for a year or two. It could become worth far less than the asking price, and where finances were becoming overstretched both the borrower and the lender would have cause for concern. Imagine what could happen if the first property had to be forcibly sold under the hammer!
As far as bridging loans are concerned it pays to be cautious. Whatever you do try not to bite off more than you can chew. It is disappointing to want to move, and to have found an ideal home, and then find that you can't proceed because a buyer hasn't been found for your existing property. Unless you are very sure about what you are doing, a bridging loan may not be the best answer. There will be other houses that you like just as much, when you are in a better position to proceed.
Don't be impetuous. There are always overpriced loans that may seem tempting when other considerations are holding you back. Be assured, that many are the times when prospective buyers have believed they have lost out, and then been rewarded with something even more desirable, after waiting until their circumstances matched their opportunities.
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free on line mortgage advice - bridging loans
free online mortgage advice - bridging loans
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