Bridging Loans Liverpool
A bridging loan is a form of short-term financing. Bridging loans give hope to people who need help purchasing a property. They are typically used to help people survive while refinancing a different financial product or selling a property.
It can be difficult to find and secure a bridging loan, but there are several comparison sites to help you find the right loan for you. Bridging loans in Liverpool are offered for up to 18 months at a time, with the loan repayable in full at the end of the term.
The monthly interest for the loan is often rolled in, unlike with other financial products, meaning that you don’t need to make repayments during the loan term. The application process is also generally easier than with other loans. Applications are processed within one or two weeks.
You can secure a bridging loan against most kinds of property or land. You can use the money for several things, such as buying a property quickly, buying an uninhabitable property, funding conversions and restorations, preventing repossession, and buying property for less than the market value.
Bridging loan pros and cons
These loan products are definitely a helpful tool when attempting to raise money, but they present more risks. You should carefully consider all your potential options before choosing a loan.
It’s recommended that you consult a financial specialist before getting any loans. There are several pros and cons to consider,
- Applications are typically processed in under 14 days, making them an excellent choice when you need money fast
- With no monthly payments, you can take out a bridging loan when money is tight but you have the assets to pay back the loan
- The market is highly competitive, meaning that you can get a loan with low-interest rates. Interest rates start out at around 0.37% per month
- When using the money to buy a property under market value the loan can be based on the full value of the property, letting you purchase property without making a deposit
- Bridging loans are a great way to purchase property that you couldn’t get with other borrowing types, such as uninhabitable property
- Bridging loans are more expensive than a traditional mortgage. While interest rates are lower, traditional mortgages are still the most economical choice for property purchases
- As the loans are generally short term, you could run into major trouble if you have a problem repaying it.
- Failing to repay your loan could lead to repossession and other significant costs
What to consider before applying for a bridging loan
There are several things to consider before taking out a Liverpool bridging loan, including the following.
You must consider the total cost of any loan product you look at. Some people make the mistake of only looking at the interest rate without thinking of the total cost.
People chase the lowest interest rate without realizing that the lender charges hidden costs such as fund management fees and exit fees.
Ask the lender for a breakdown of the total cost of the loan before applying. Having this to hand makes it easier for you to accurately compare loan products.
Consider the viability of your repayment method. One big danger of taking a loan is being unable to repay it. Think about how the loan will be paid upfront and if you have an appropriate exit plan.
If you want to sell your property, for example, then make sure you get a loan that gives you long enough to find a buyer and complete the sale.
If you look for a quick sale just to pay your loan back, you’ll end up with less money than the property is worth.
If you want to refinance the loan into a longer-term loan, then make sure your application is likely to be accepted before applying.
Try to get an agreement in principle from the lender before finishing the bridging loan.
Are you getting a good deal?
There’s a major difference in costs between different loan providers. Some lenders are also only available through certain brokers, meaning that you might not have access to the best rates.
We always recommend trying a few different providers to get the best possible deal on your bridging loan in Liverpool. If you would like help with calculating fees, then use our bridging loan calculator.