Bridging Loan – The Best Option When Buying A New House
Bridging loans are popular in Singapore, especially when it involves the purchase of new property. We are talking about the moment when you are looking to buy a house, but to do so, you need to sell another property.
For these sorts of situations, there’s a type of loan called bridging loan.
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What Is A Bridging Loan?
The bridging loan consists of a credit that is given to a person who wants to buy a property but to do so; needs to sell another. It means that at the moment, you do not have the capital to purchase the house or apartment. However, you are waiting to receive a significant amount of money for the sale of another property.
Many people go through these kinds of situations, and such problems restrict them from buying a house until they have sold the other one.
Bridge loans exist for these circumstances and will allow you to buy the property you need even as you wait to sell yours.
It is a short-term loan (usually not more than a year), which gives you enough capital to buy. Added to this, it gives you the necessary time to sell your property, as well as not miss the opportunity to do good business for both.
Why Is A Bridging Loan Convenient?
Generally, a mortgage loan eliminates the possibility of selling your house, since it is the guarantee of the financial company that lent you money.
A bridging loan removes that prohibition and allows you to sell your property and by receiving money for it, you can pay your debt.
Besides, this sort of loan is more accessible to purchase, since the amount of money you receive is less compared to a regular mortgage. It consists in giving you the economic solvency necessary to pay for the property you want, without having to wait until you sell yours.
Another benefit that you will obtain from this sort of loan is that the procedures involved are not very rigorous. The process is much simpler as it takes less time and increases the possibility of you buying the property you want.
What Can I Have From This Bridging Loan?
A bridging loan can only be used for mortgage loans, and you cannot use it to buy other kinds of goods or pay debts. The reason is that its goal is to facilitate the process for people who need immediate capital to buy a property.
It’s a solution for those who need to buy a property but in order to do so, the only way to is through the sale of another.
There are several reasons why these loans are more convenient than a traditional mortgage loan.
One of them is that being a short-term loan, you will not have to worry about inflation rates and long-term payments.
Another reason is that you do not have to mortgage your property, and you have no restriction on selling it.
When Would You Need A Bridging Loan?
Bridging loans is a solution for several kinds of people, some of whom are those who are looking for a property but do not have enough capital to pay for it. Such people are the most benefited by bridging loans for several reasons. One of them is because they do not have to apply and be burdened with a long-term loan.
Other people who benefit from these loans are those who want to start a real estate business. Other people that might benefit from these loans are small businesses or entrepreneurs who do not want to lose money when investing in a property, but seek to increase their sales portfolio. (See Business Loans for Entrepreneurs)
Buying a property depends on many factors, but one of the most important is to have the capital required. Many people lose the opportunity to buy their dream house, for not having the necessary financial solvency.
This kind of situation does not have to be a problem for you anymore. With a bridging loan, you can buy the property that you like, without worrying about the money and how to pay it off. It is a loan that finances you in the short term and gives you the opportunity to sell another property.
It is a short-term loan which prevents you from dealing directly with banks for many years, and gives you the opportunity to buy any property. These type of loans, in addition to increasing the chances of purchasing the property that you like, allows you to have the money to pay for it.