Due to being a short-term solution, bridging loans come with high interest rates. You could end up losing assets, such as your home, if you cannot repay the loan, and interest rates and fees tend to be high as you're paying for the convenience. Bridging is specialist finance and the loans are high-risk.If you can't cover the cost of a house move but don't want to miss out on a dream move, bridging loans are an option. Very large sums of money can be granted. Loans reaching into tens of millions can be agreed, allowing people to cover the purchase of multiple properties.However, you could stand to save a lot of money if you repay the loan as quickly as possible. Repayments can be flexible to suit your desired terms. Depending on the agreed deal, borrowers can take up to a year or 24 months to pay back the loan.Brokers can release the loan within days - giving the borrower an almost-immediate short-term fix. Anyone considering using one needs to weigh up the potential positives and negatives. The high-risk loans are often considered the last resort for people buying a home. What are the pros and cons of a bridging loan? If you are taking out a first-charge loan, you'll typically be able to borrow more than if you were taking out a second charge loan. So if your house purchase costs £200,000, you'll need £50,000 to begin with. In cash terms, bridging loan providers might lend anything between £25,000 and over £30m.īut you'll usually only be able to borrow a maximum loan-to-value ratio (LTV) of 75% of the value of your property. How much can you borrow with a bridging loan?
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