Closed Bridging Loans
Bridging loans are particularly appealing for those people who need financing in order to buy a new home, while having the old property on sale. Hence the name “bridging”, because it actually covers for the gap of time one need until the property gets sold.
A closed bridging loan has the following main characteristics
A closed bridging loan has the following main characteristics
- It is the most secure type of bridging loan
- It requires that you can make proof of the fact that a deal on the sale of your home has already been closed
- For example, you have found the proper buyer, but payment is due to a given point in the future (in two months time)
- the lender may approve you a loan of even 85% of the real estate value, exactly because of the fact he doesn’t have to undertake a great deal of risk (unlike with an open bridging loan).
Scrutinize the market, search and compare offers before you actually make a final decision. Working with professionals who have earned a good name on today’s UK market is a matter of priority. These lenders will always respect their customers, because they have the necessary experience in dealing with a great variety of cases. Just as you pay attention and make carefully choices when you are in search of simple car insurance, you should do the same when looking for loan options.
You always must compare the overall prices of loans (including notary fees, origination charges, and other) when it comes to a closed bridging loan. Only this way will you know whether your choice is also an affordable one. Depending on the risk the lender has to undertake, the loan-to-value he will offer you might be higher or lower. His fact certainly also depends on the fact whether it is a new home you request financing for (in which case the LTV is going to be higher), or an old home (which supposes more risks, thus a much lower LTV involved). Other characteristics to consider:
You always must compare the overall prices of loans (including notary fees, origination charges, and other) when it comes to a closed bridging loan. Only this way will you know whether your choice is also an affordable one. Depending on the risk the lender has to undertake, the loan-to-value he will offer you might be higher or lower. His fact certainly also depends on the fact whether it is a new home you request financing for (in which case the LTV is going to be higher), or an old home (which supposes more risks, thus a much lower LTV involved). Other characteristics to consider:
- usually, high interest payable for these types of loans
- arrangement fees may hit 2% to 2.5% of the loan total value
- if you are not 100% you understand all the provisions the loan comes with, you should ask an expert’s opinion who will guide you through the process
