Bridging loans

Bridging loans are the perfect solution for you if:

You have already found the home of your dreams, and you want to buy it fast
But you are meeting difficulties in being able to sell your present home
So, you don’t have the necessary financing for paying for your new home

This is what bridging loans stand for: you need the money quickly, and the “time” problem is being solved, if you become eligible for a bridging loan. Having a property out for sale, is most of the times difficult: you cannot sell it quickly enough, and the home you wish to buy for yourself may just be bought by someone else who has the necessary financing.

You must carefully inspect the market, in order to make sure you will pick out the best option. Plus, it is advisable to opt for a bridging loan especially if you know the exact time when your home will be sold (for example, if the buyer can only pay you in one month and not sooner). This way you know for sure that you can repay the bridging loan at a given date.

You need to take into consideration the fact that the real estate market is also going through a crisis, and prices are continuously dropping. Weigh your options, and decide whether such an option is truly advantageous to you. Basically, you can choose between two options:

Closed bridging loan
Open bridging loan

The closed bridging loan is the securest type of loan between the two, because it supposes that you have already “closed a deal” upon the selling of your current home. So, you just practically need coverage for a very short time, but the bridging loan will be paid back at a certain date. Closed bridging loans come with typically low interest rates, and generally good terms and conditions, exactly because the lender does not have to undertake major risks.

Open bridging loans are those types of financial products which are intended for individuals who haven’t even put out for sale their property. It is a much riskier option, because of the fact you are uncertain whether your home will actually get sold, and when. Therefore, lenders will not go easy on you, in the sense they will charge much heftier fees and charges for your loan. Open bridging loans have a term which usually does not exceed one year, so you need to have a very good plan drawn up, before you proceed. Whichever financing method you choose, you must remember that bridging loans are offering coverage only for a relatively short period of time.