There aren’t many good things to have come out of the credit crunch. But one good thing – from some people’s point of view at least – is that it’s cheaper to buy houses. In fact there are currently about 15 houses for every buyer – so it’s really a buyer’s market. That is, of course, if the buyer can get the finance.
One type of finance that can really help in the current situation is short term bridging loans. These can help shift properties and unblock the log-jam in house-sale chains. In fact if used correctly short term bridging loans can help in an amazing number of situations.
So who are the people who can particularly benefit from short term bridging loans in the current climate?
1. Existing homeowners who need to move house – whether it’s to upsize, downsize or relocate. You find the perfect house for your requirements and want to snap it up, but haven’t yet completed on your old house. A bridging loan can come to the rescue. Many people have been very wary of short-term bridging loans in the past and it’s true they can be expensive. However in many cases, losing the house you want and maybe having to lose your own buyer can be more expensive, as well as very upsetting.
2. Buy to let investors looking to buy at auction. There are a lot more homes currently being sold at auctions and sadly a lot of them are repossessions. Of course nobody wants this – it represents a lot of heartbreak and devastation. But the fact remains that a lot of properties are available quite cheaply. Of course once you have won an auction you have to come up with the money within 28 days, which is not long enough to arrange a standard mortgage.
3. You may in fact be able to use the auction method if you are a first-time buyer and want to take the chance of finding an affordable home. Short term bridging loans have to be secured on property so, as you don’t have any other property, your bridging loan would have to be secured on the property you are bidding on – so of course you risk spending money on a survey and then losing the auction.. You have to decide whether the chance of a bargain is worth the risk.
4. If you yourself are under the threat of repossession, one possible way of staving off the repossession is to take out a short-term bridging loan to cover your mortgage arrears, and roll the repayments into the loan amount. Once you have had the loan for a number of months your bad credit will be repaired to a certain extent and you should be able to remortgage at a better rate. This is still quite risky under current conditions – if you don’t manage to get a remortgage you won’t be able to repay the bridging loan. However, quite a number of people have successfully managed to use short-term bridging loans to buy them more time.
At a time when most types of credit can be very hard to come by, short term bridging loans can often come to the rescue. Of course they carry some risk – that’s why they are more expensive – and you should never take out a bridging loan without knowing where your means of repayment will come from. But if used sensibly, their speed and flexibility make them invaluable in all sorts of situations.