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Short term finance can often be something which many people may need in a variety of different situations. To list all of the situations would take up a whole book, but some of the most common situations include; real estate investment, moving home, or developing some sort of business complex. However, not everybody knows what a bridging loan is and how it can help you if you are in one of the above situations. What is a bridging loan? When someone refers to this type of loan they may use other names for this form of finance, such as a swing loan. The name implies exactly what it appears because it’s a short term loan which is designed to act as a bridge between two separate transactions. For many people it can be used when an investment doesn’t go according to plan, but there are situations where one of these loans may not be the best move financially. When is a bridging loan useful? The most common situation where a bridging loan comes into play is when a family is relocating somewhere else. In the UK this is where the majority of these loans are sold because people are often unwilling to wait. The way it works is that a family may find a house which they want to move into as quickly as possible for whatever reason, but they haven’t managed to sell their existing house yet. Since they are still in their existing home and paying an existing mortgage they can’t purchase the new house because they don’t have the funding for it. The family may then apply for short term finance in order to purchase the new house while the old house is still on the market. This is often a perfect way to snag the house of their dreams without having to wait nervously for somebody to buy their old house first. The only issue which a family may encounter is going into debt if the house doesn’t sell within six months of the bridging loan being taken out because these loans are short term which means they will have higher interest rates as the bank anticipates the loan to be repaid fairly quickly. Using a bridging loan to make money These loans can also be useful for making money with because it’s a common tactic which is used by real estate investors at house auctions. With the recent recession causing financial chaos around the world, repossessions are at an all-time high which means good news for real estate investors as they can snag quality property at a seriously reduced price. A real estate investor will find the house they like at an auction and then take out one of these loans in order to purchase the house. The loan is then fully repaid when the house sells, usually at a much higher price than it was bought for. Usually the application system for real estate investors is quick and easy as the eligibility for the loan is decided on the applicant’s current assets and financial history. Mayfairbridging.com specialise in short term finance for all commercial and residential purposes. Application is easy and decisions are fast.
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Short Term Finance, Bridging Loan,
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