Published on September 23rd, 2019 | by Cristina Darst0
Bridging loan and debt management
A Bridging Loan is also known as a short-term mortgage. This type of loan is most often used to cover temporary financial problems during property purchases. These types of loans are best for the people who are buying a new home but have not yet sold their old one and thus they need short term finance to allow them to go ahead. More interestingly, Bridging Loans can also be used by the business community. Some people also use these types of financial aids to cover large and unexpected expenses.
How much do you need from a bridging loan?
Not to mention, Bridging Loan amounts will vary depending on your own needs, income and on the lender you choose. Most of the time these loans involve securing either the full purchase of an additional property or giving you sufficient finance to make up the sums you need. Bridging Loans are usually of relatively high value. The amount of the loan depends on the lenders while generally specialists will not provide the full value of your property and may cap their loan at up to 70% of its worth. As Bridging Loans are Secured Loans, therefore, the borrower has to place collateral against the loan amount and as obvious, the loan amount also depends upon the value of the collateral property placed.
Following are the different types of properties that can be used as the collateral against a Bridging Loan:
- Residential properties
- Commercial plots or Semi-commercial properties
- Auction properties
- Retail shops
- Development sites
As mentioned earlier, Bridging Loans are generally used as short term financial problems so it can be taken out for as little as a week. It is very uncommon to find such loans for a period of more than six months but if you wish, you can negotiate the deals for longer periods as well.
The main disadvantage of a Bridging Loan is that you will find it at a much higher rates than other types of property loans. Sometimes your lender may charge monthly interest rates rather than annual ones so the longer you need the bridging loan, the more you’ll have to pay. In fact, the interest rates here are much higher than regular mortgage loans.
Be careful how you mange debt in while using a bridging loan
Debt is something that bothers everybody once in life, but a person should be capable enough of Debt Management so that his credit history can keep well. Paying of bills, monthly payments, car loans, credit cards and many other things are there that can really push people into a debt hole and if not paid on time can result in bankruptcy, as well. The best way to get rid of the debts is to decide on for different debt management plans and make monthly payments at time. These days, numerous debt management plans are offered by the service providers and lending institutions that can really assist people to manage their debts and keep up their credit history.
Debt Management In point of fact, the term Debt Credit Management means that people spend less than what they earn and this is the best way to keep away from bad credit history and potentially a bridging loan helps. When a person faces debt, he can always consult non profit foundations that provide credit or can even go in for a service provider that can provide a reasonable debt management plan. Making a monthly budget every time can be of a great assistance while managing all the outstanding payments. Extra expenses should be cut short and the money earned should be divided equally for clearing the due balance.
Debt reduction through a bridging loan
This is the best debt reduction strategy that can help people to keep away from bad credit history. In case, people are not able to manage their monthly payments, they can also opt for debt consolidation loans and get facilitated. Online Lenders Numerous websites are available on the internet from which people can effortlessly choose a service provider for bridging loans that can support them in clearing off their outstanding amounts including all bills and other expenses. People just need to choose the right lending institution that offers least interest rates on the one time payment so that it keeps easy on the pockets of people. Most of the service providers offer different plans to the people that people can choose as per their requirements. So, feel free to surf the websites and choose the right debt management plan to stave off from bankruptcy.