Facts To Know About Bridging Loans
When looking for financial assistance, you will realize that so many banks and financial institutions are willing to help. However, this is not until you start the application process. Loads of financial obligations and regulatory frameworks can make your life for difficult. That said, there is an easier option of accessing cash just when you need it. Whenever you require immediate funding, Bridging Loans London are the answer. The good thing about these loans is that they are not restrictive. Meaning, you can have the amount you have when you want it most.
What are Bridging loans?
Ideally, bridging loans are short-term mortgages lent to borrowers in situations that require immediate funding. Contrary to mortgages, this source of financing does not require a lengthy process. You only need to have security for the loan. This could be an asset or non-property asset.
Types of bridging loans
Most lenders offer two major types of bridging loans. Closed and open loans. Closes loans are advanced to lenders that are certain of when they will repay the money. However, in the case of any uncertainties in your income streams, it is prudent to go for an open loan.For instance, in case you have just listed your property for sale, and you need cash, it is prudent to seek an open one considering that property sale can take some time. Besides, if you already have a buyer, and you are just about to complete the deal, you can opt for the closed option.
The amount of money received depend on the security. Ideally, the loan to value amount is usually close to 80%. In exceptional instances, this rate can be higher based on whether the loan is closed or open. Closed loans can be awarded a higher loan to value rates than most open loans. This implies that lenders with valued assets as securities are entitled to better deals. Notably, commercial bridging loans have higher interest rates that those offered by banks. However, they present the best short-term solutions for lenders that are not willing to follow the lengthy process common to banks.
When in dire financial need, most people are tempted to approach sharks or take payday loans to address their financial emergencies. As far as these options are concerns, you might have read or come across the horror stories that result. As such, with some equity, you should consider looking for bridging loans for all the right reasons.