If you've found the perfect new home for you and your family and your offer has been accepted, but you can't move forward because you can't sell your current home, a bridging loan could be the answer. The bridging loan is used to bridge the gap, just like its name says.
Even though this may seem like the answer to your prayers and can keep you from losing your dream home, you should only use it as a last resort because it is usually the most expensive way to get a loan. But in the short term, they might be the only way out of a problem.
There are two main types of bridging loans: the open bridge and the closed bridge. The closed is available to people who have already made an exchange on the property they already own. This is because very few offers fall through after the exchange has begun.
People who have found their dream home but haven't yet put their current home on the market can get an open bridge loan. For this kind of loan, you'll need a lot of backing, and you'll have to show that you have a lot of equity in your property before you can move forward.
Those offering a bridging loan can expect the lender to want to see the mortgage terms for the new property along with the details for the property and of course you will have to show that you doing whatever you can to make sure that you sell your existing property.
The lender of the bridge loan will also want to make sure that you can pay back the loan. You will be asked to show how you plan to do this, as well as how you would handle things if the deal fell through a few months later.
Most lenders who offer this type of bridging loan will only give you up to 12 months to pay back the loan. However most will allow you to negotiate after this period of time providing of course that the interest has been paid on the loan and no changes have occurred in the circumstances.
The best way to learn about bridging loans is to look them up online. Not only can you learn about the different kinds and what's available, but you can also compare them and find the best deal for your situation.
