You are likely to own and live in more than one property in your lifetime. For instance, you may purchase a Housing & Development Board (HDB) build-to-order (BTO) flat as your first residence after you get married. After a couple of years and as your income increases or your family grows, you might sell your HDB flat and move to a larger, more spacious home.
This is where the importance of a bridging loan comes in. A bridging loan helps ease your financial transition when you purchase and sell a property. If you are considering obtaining a bridging loan to help cover the purchase of your new home while the sale of your existing one is underway, this article is especially for you! In this article, we share more about bridging loans and whether or not it is easy to get one.
What is a bridging loan?
A bridging loan is a short-term loan that you can obtain from a bank or a money lender to more or less ‘bridge’ the gap between the time you are required to pay the downpayment for your new property and when you receive the proceeds of the sale of your previous property. Usually, there is a maximum amount for bridging loans, which is 20% of the property value.
However, you can still sometimes get another limit approved for as long as the sales proceeds from your former property can cover it. Before applying for a bridging loan, it is vital that you understand what you are getting into. You should only use a bridging loan to briefly tide you over until anticipated funds become available. Otherwise, you run the risk of making a purchase you cannot afford and need help with repayments.
Does it take a long time to get a bridging loan?
In numerous cases, a bridging loan is a great solution that allows individuals to move swiftly and maximise a market situation, such as an auction. It is also beneficial if your own purchaser has already pulled out but you want to keep your property purchase. In essence, it is not necessary for bridging loans to be used for urgent situations only.
If your property is undergoing renovation, and you need access to a considerable amount of money in a very short period of time prior to reselling, a bridging loan might be your best option. In these cases, it is not desperate to obtain the money within a matter of hours. Depending on several factors, it can take anywhere between 72 hours to a few weeks for a bridging loan to complete.
Compared to other easy cash loans, such as instant cash loans and payday loans, bridging loans are not the fastest type of finance to get approved because of their complexity. Most of the time, money lenders are experts and quite agile in obtaining the information they need.
Conclusion
Overall, a bridging loan is a comprehensive solution that can help you sort out your finances in various situations, such as when you are purchasing a new property and selling an old one, and you require some cash to cover your necessary payments during the transition. However, as mentioned earlier, bridging loans are complex loans. Hence, if you are in dire need of cash, a bridging loan is not the most ideal solution since it can take a few days for the loan to be completed. As such, determining the right loan offer for you is crucial when it comes to obtaining a loan.
If you need help determining what type of loan is the best for your situation, Orange Credit is here for you! We are a seasoned, reliable, and expert money lender offering an array of easy and flexible loans for your every need. From bridging loans and consolidation loans to fast cash loans and payday loans, we definitely have the financial solution that matches your requirements. Contact us today to find out more about our services.
