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Bridging Loans
By: Joseph Kenny
A couple of years ago my wife and I were in the process of selling our house. We
were pretty sure we had found a buyer and had agreed on a price acceptable to
both them, and us but they wouldn’t be able to buy our house for about three
months. My wife and I were totally ok with this since we weren’t in any
particular hurry to move, we just wanted to move into a bigger home outside of
town, somewhere a bit more rural.
Well, one weekend while we were driving around the countryside looking at
houses, we saw the perfect farmhouse. It was exactly what we were looking for.
Not too far out of town, on a quiet road, overlooking a little lake and
surrounded by tall oak trees. In short it was perfect.
We contacted the selling agent and found out that the price was within our
budget, but only just. We told him it would be three months before we’d be able
to buy it and this caused him to pause. Apparently there was a lot of interest
in that little house and he couldn’t justify delaying the sale for three months.
So we let it go.
Why a Bridging Loan?
We did find another beautiful house so the story has a happy ending but is there
anything we could have done to get that first house? The answer, had we known it
at the time, would have been a bridging loan. Bridging loans are short-term
loans offered by commercial lenders to borrowers for a specific purpose. They
can range in time from two weeks, for a very short loan, to up to three years
for commercial bridging loans. Homebuyers who have not yet sold their property
and wish to buy require these bridging loans.
Interest Rates
The interest rates are probably higher than for your typical mortgage but this
is because of the added flexibility and convenience you have from the lender.
There will also be set up fees involved. However, they may work out at
significantly cheaper than some of the alternatives such as renting
accommodation. There will also be many situations in which the price will be
well worth paying if it means getting your dream home.
You should always shop around before agreeing to a bridging loan as rates and
fees can vary significantly. You don’t have to get it from your mortgage
provider although there may be advantages to doing so.
About the Author:
Joseph Kenny is the webmaster of the loan information sites http://www.selectloans.co.uk/
and also http://www.ukpersonalloanstore.co.uk. At the Personal Loan Store you
can find all the different loan types explained.
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