‘Money need’ is something that comes unexpectedly, for anyone. But in some way, a Bridge loan is helpful for you.
It has many different names in different country, like- caveat loan, swing loan or bridging finance. This type of bridge loan is very popular in the United Kingdom. It’s a kind of temporary loan that lasts for two weeks to three years, depending on the value or the property. It is known as a bridging loan since it fills in as an extension between one time of financing and another, more steady source of money. A bridge loan may issue for individual or for commercial need, but the interest rate is much higher than other loans.
Interest is much High
Though the rate of interest is much high, the Bridge loan will be very helpful in some positions. Like:
- If you want to buy a house, but you are short in money, but also you applied for a home loan in your office, then the bridging loan is very helpful for you. You may take the amount from the bridge loan provider, and pay them later when you have your home loan.
- The loan amount term can be, very short to long-term. Mean 7 days to 12 months.
- Your credit score will boost up if you repay the loan amount in time.
- A property can be purchased in cash using Bridge loan, so that makes the person a good Real Estate businessman or cash buyer.
But the downside of the Bridge loan is- it charges a high rate of interest. Its 1% or 1.5% per month, some provider wants more than that. So due to the excessive interest rate, many fall into the defaulter list. And their credit score is also affected. Compound interest of Bridge loan will be very difficult for the consumer to pay back the money.
So before taking a Bridge loan, think twice, and read all the documents, thus you can have a clear deal.