Annuity Blogger

With the market for loans constantly growing and diversifying, it’s no wonder that many of us are confused by some of the more specialist or unusual loan types to emerge recently. Bridging loans are an example of a product that’s receiving more attention.

If you’re looking to find the best loan to cover home moving costs, a bridging loan could be the product for you.

What Is a Bridging Loan?

Quite simply, it’s a product designed to tide you over in the short term when you’re waiting to sell your old property and waiting for the transaction on the new property to complete. It’s there to make sure the payment towards your new home will go through successfully and without hassle. It can also save you money overall, despite the extra expense involved initially.

Advantages of Bridging Loans

The bridging loan is a short-term loan which can be put in place for 12 months. It offers the opportunity to make your property purchase completion more quickly than would otherwise be possible. It enables the purchase to go through successfully and without stress when it could otherwise fail as a result of a chain collapsing or the purchase being disrupted. These types of loans can be taken out at reasonable rates and offer a high level of flexibility, so that you can pay it off before the 12-month period has elapsed if you wish to. The loan effectively enables you to become a cash buyer, which can enhance your bargaining power during any discussions about the price of a property.

Disadvantages

Of course, with any financial product there are possible disadvantages which must be considered. These loans are another cost to factor in at a time where there is already likely to be many other costs to deal with. Bridging loans require meetings with another lender for negotiations regarding the loan amount and repayment terms. These will tie up more of your time and the interest rates tend to vary between 1 and 1.5% a month (which doesn’t compare favourably with the average 5% APR offered by the majority of mortgage lenders.) Other costs may also be applicable, such as arrangement or broker fees. These loans are also unregulated.

How Do I Find the Best Bridging Loan?

To find the best loan on the market, it is worth speaking to a financial advisor or experienced intermediary with specific knowledge of this type of finance to help you arrange the right loan for your individual needs. When used correctly and managed wisely, bridging loans do provide the benefits of easy and speedy finance in certain property-buying situations and they are worth considering as part of the overall service mix. You can also use price comparison sites such as moneysavingexpert.com to find the best deals and the latest top buys – these are updated daily to capture market changes.

The Benefit of Independent Advice

Remember that there is a vast range of products and services aligned with the property-buying process – from specialist mortgages through to insurers, solicitors, conveyancers and other types of financial provider. In all cases, it’s worth seeking expert advice, or at least equipping yourself with the necessary information through in-depth research. Product offerings change constantly and as mortgages – and property purchases in general – are likely to be the most expensive assets you’ll ever buy, it’s well worth spending a little extra time and money on seeking out the best information and guidance.