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August 14, 2023What Is A Bridging Loan and how does work when you are buying a house?
A bridging loan is a short term loan used to cover the gap between two different loans.
A bridging loan is an alternative way to finance a home improvement project that doesn’t require a down payment. It allows you to borrow money for a specific amount of time, usually six months to a year, while you save for a larger mortgage.
A Bridge Loan or “Bridging loan” is a short-term loan but usually with high interest rates.
This is to help those who want to complete the purchase of their property before selling their current home. They provide short-term financing before your long-term financing (the funds from the sale of your previous home) reaches its destination.
Buying a home can often be a long and complicated process, especially when selling and buying at the same time. A number of factors can slow down the buying and selling process, including real estate chains or concerns identified in a survey.
Buyers may be in a position where they found a home to buy before selling their existing property. This is where bridging loans come into play.
Also this type of loan is usually taken out by people who have been turned down for a mortgage or need to pay off an existing loan before they can get another one.