Financial decisions such as taking out a bridging loan are hugely important. Financial experts advise individuals and businesses to carry out due diligence before beginning the bridging loan process. This article reiterates the importance of research before taking out a bridging loan.
Bridging finance comes in various types, and each type may appeal to different people based on their unique financial situations. For instance, closed bridging loans have fixed repayment dates and appeal more to homeowners who are advanced in the process of selling their existing properties. That way, they can have enough guarantee of recouping from the sale and repaying their bridging loans.
Open loans may not have fixed repayment dates. Rather, lenders request borrowers to present evidence of their ability to repay the full loan amount. In this case, you must provide a guarantee that you will sell your property's equity or take a mortgage to pay back your loan amount.
Other types you can consider are first and second-charge loans. Generally, each loan type comes with its pros and cons. Doing thorough research can be a great way to determine the right bridging loan for you.
An exit strategy is defined as your plan for how you intend to repay the full loan. Usually, an exit strategy for a loan and the method to repay the loan is going to be via the sale of property, refinancing or arranging a longer-term loan solution such as a traditional mortgage. Lenders require an exit strategy as part of your application process. It helps the lendor determine your ability to repay your bridging loans.
Truthful information and transparency is essential for an effective lender-borrower relationship. Lenders need the best possible information during the application process. Transparency and being forthright can hasten your application process and improve your success rate. It's very important to be forthcoming about any past and present difficulties with your lender. Taking their advice can increase your chances of securing your needed bridging loans. Withholding key information is very likely to delay your application and possibly result in your inability to access the bridging funds you require.
Brokers price and package their services differently based on the current market and your circumstances and requirements. Some brokers may lower their prices or provide additional services to beat the competition. Therefore it's crucial to comparison-shop multiple lenders as part of your research efforts.
Double-check their history to ensure you're dealing with credible lenders on the financial market. You can also review their terms and conditions, ensuring they fit your financial objectives. Assessing what existing customers say about your preferred bridging loan finance provider can also be a great option in narrowing your search down to the best lender on the market.
