What is a bridging loan: principle & advantages

 

Have you ever heard of the bridging loan but are not sure what it is and would like to know more about it? Don’t move, you’ve come to the right place to find the answers to your questions about it.

What is a bridging loan? What is this for?

What is a bridging loan? What is this for?

The bridging loan or bridging credit (we sometimes hear about lending credit and it is, even if the term is not used a lot, a very legitimate name when we know the principle) is a loan which is contracted within the framework of an acquisition real estate when you have not yet sold a property from which you wish to dispose.

Advantages of the bridge loan

Advantages of the bridge loan

Although the bridging loan also has some drawbacks (it protects financing organizations and you will be forced to lower your selling price if you cannot find a buyer, or it will even be converted into an amortizable loan with a de facto extended repayment term) also has many advantages.

The bridging loan therefore constitutes a particularly advantageous advance on contribution insofar as it allows many people to start being able to prospect without having sold or received the money from the sale of their other property. The conditions of your bridging loan will depend on your situation, but be aware that the amount loaned will be capped.

If there are several types of bridging loan as we have seen, there are also several types of conditions depending on the organization or bank to which you will turn. Like every type of credit whatever it is, it is in your interest to compare broad spectrum the different offers that you can get.

The bridging loan is a loan that lasts from 1 to 2 years, which allows you to sell your property at the best price and not sell it in a hurry at a low cost. It is only reimbursed from the moment your property is sold and all without penalty, which again is very advantageous.

By doing so, you will realize substantial savings from the fact that you will not be forced to pay for a rental in the interval that will separate the purchase of your property and the sale of the one you own. When you know how much certain rentals can be these days, this is a very significant saving.

Finally, if you sell your property faster than expected because the latter; even if you want to change it (transfer, purchase of a smaller property, family reunification, etc.); has many advantages in the eyes of future buyers, your bridging loan will be reimbursed more quickly and will cost you less than if you go close to its term. Between the most likely best added value on the sale of your property by knowing that you are not in an emergency situation and the absence of rent to pay during the transition and your arrival in your future walls, the Bridging loan can save you a lot and without giving up a possible favorite!

How to get a bridging loan at the best conditions?

How to get a bridging loan at the best conditions?

You are in a situation where a bridging loan can prove to be interesting and you therefore wonder logically how to do to get the best conditions possible at this level? To do this, you can either start comparing offers as we indicated above, or why not use a broker who will compare for you to find the best offer. If you are used to working with a broker, the latter will probably be able to refer you to the organization or organizations that he knows offer good conditions for a bridging loan or credit.

For the rest and for all those who are wondering, a credit of this type is similar to a traditional mortgage: you will need to provide the same documents, proof of income as for a real estate loan, etc.