Buying a good home is the dream of everyone and most of us wish it to be a straightforward process, where you like a property, pay the price and start living in it. But this is not how the property buying process works, as you have to sell your existing property and arrange required funds to be able to own a new and expensive house. Depending on various factors, such as age, condition and location of the property, it can take weeks or months to be able to attract a buyer, making it even more complicated. A viable solution to this problem is arranging large bridging loans.
Before delving any further it is important to understand what bridging loan is and how it can help property buyers. As the name suggests, this type of loan is taken to bridge the gap in finances. Imagine you want to buy an expensive property; however, you are not in the condition to buy it due to lack of finances and your old property is also not getting sold. This is where the bridging loan comes into the picture. It can be taken against the current property you own, as well as the new one. The amount you can borrow is determined by taking into consideration the value of your existing and new property. Once you have sold the current property, your usual home loan payments will continue.
The very first reason making this type of loan so popular among borrowers is that you do not have to wait to buy a new property. In the real estate market waiting means missing out on lucrative deals, as you never know who will grab the house you like so much, while you are arranging the funds. Therefore, by arranging large bridging loans, you can avoid the wait for your property loan getting approved or your existing property getting sold and just buy the house you want. This type of loan makes it possible for you to get the money you need and then sell your home later on.
Another scenario could be where you sell the house before buying the new one. By doing this you might have to rent an apartment to keep your stuff safe till the time you are able to buy the new house. However, by doing this you will have to bear the additional expense in the form of rent. You can save yourself from paying rent and the cost of relocating again and again by taking bridging loan, which will help you buy the new house and move just once.
Although the concept of bridging loans is not new, it got popularised more in recent times as people began to discover its various advantages. Earlier the interest rate charged by banks on this loan type was higher as well. However, now the scenario has changed and you can get bridging loan at almost the same interest rate as the standard loan. Today, arranging large bridging loans has become a common norm, as it gives you the required financial help to own the property of your dreams.