I’m looking for short-term cash, could a bridging loan help me?
May 7, 2013
A bridging loan should only ever be looked on as a short term solution to a financial problem and as part of a longer term debt repayment plan.
Recent predictions from privately funded lender West One Loans suggest that by the end of summer 2013, bridging lenders will be making gross loans to the extent of one billion pounds.
If you’re looking for a short term solution, a bridging loan may help you stay on track. Although it’s equally important to be aware that as with most short or long-term debt solutions, there are some risks to consider.
A bridging loan is most commonly used in the final stages of a property purchase. Perhaps you’re in need of spare income to finalise on a purchase, but your old property still hasn’t sold. A bridging loan could help ‘bridge the gap’ until you can afford to pay it back. Bridging loans can also be used in other circumstances, such as when an unexpected tax bill or fine arrives on your doorstep. However, all situations involving a bridging loan must be discussed with a financial expert, due to the high risk nature of the loan.
In most cases, a bridging loan is secured against your home, so always make sure you’re in a position to pay back the loan in the short term or you could face repossession. It’s also important to bear in mind that late payment of only a few days can still result in expensive financial penalties. Individual interest rates will vary depending on several factors including the total amount borrowed; the length of the loan (typically from a few weeks to a few months) and obviously one lenders’ interest rate may vary in comparison to another’s. It’s important to discuss this with a financial adviser and if a bridging loan is your best option, your adviser can assist you in finding the best short-term deal.
If you’ve previously struggled with debt, you may be worried that a poor credit rating will affect your application for a bridging loan. However, this might not always be the case, as the loan will always be secured against your property.
A bridging loan is considered a ‘risky’ solution in terms of debt management, but our financial experts at Scotland Debt Solutions can discuss all your options and talk you through the steps required to meet your individual needs. Why not contact us today and we’ll give you peace of mind and work to ensure your finances are under control.
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