While selling your existing home, buying a new home can be stressful, especially when time doesn’t align. A bridging loan allows you to secure your new home before your current one is sold. Under this article, explore you can leverage this short-term financing option to buy your next home without unnecessary worries.
Understanding Bridging Loans
Bridging loans, a kind of short-term loan is designed to “bridge the gap” between buying a new property and receiving funds from the sale of your current home. These loans are typically last from few months to a year and secured against your property. It can be structured in 2 ways:
- Closed Bridging Loan: When a confirmed sale date is there for existing property, this is used, thus, making it less risky for lenders.
- Open Bridging Loan: When there is no fixed sale date but intending to sell the property, then this loan is used.
How to Use it Without Stress
- Assess Financial Situation: It is necessary to analyze finances before applying to determine if you can manage the loan comfortably. Consider the loan amount, interest rates, and repayment terms when applying.
- Choose the Right Loan Type: If your existing home is already under contract, a closed bridging loan is a safer choice due to lower interest rates and if its still in the process of selling, an open bridging loan can be used.
- Compare Lenders & Loan Terms: As compare to traditional mortgages, bridging loans comes with the higher interest rates. Look for moneylenders offering reasonable terms, lower fees, and flexible repayment options.
- Avoid Overborrowing: While bridging loans can be convenient, borrowing more than necessary can lead to financial strain. Always stick to a realistic budget and consider additional costs like legal fees, property taxes, and loan charges.
Conclusion
Overall, a bridging loan can be an effective tool for purchasing your next home without stress. It is must to consult with professionals to ensure that a bridging loan aligns with your financial goals and property plans. Connect with OT Credit, a licensed moneylender in Singapore that offers low interest rates bridging loans with 100% security.