Homebuyers urged to think hard before using Bridging Loans
Homeowners looking to fund the purchase of a new home via the mechanism of Bridging Loans have been advised to tread with caution.
According to leading financial management firm, Bridging loans are amongst one of the most common ways for borrowers to jeopardise their financial health, due to the inflated risk that the very nature of this particular method of financing presents.
For those who are not familiar with the product, Bridging loans are a form of short tern finance used by individuals who are in need of raising additional funds to “bridge” the gap between selling one home, and purchasing another. They are usually requested by home buyers who have progressed some way along the buying chain, and have come unstuck as a result of not being able to finalize the sale of their home fast enough to pay the balance of their new home.
A spokesperson for the firm responsible for the warning commented that this type of financing should only ever be considered as an end alternative. Not only are bridging loans expensive, they can also be incredibly risky, especially if the buying chain falls apart after the funds are released.
Homebuyers who are considering the Bridging loans route, should be aware that it is extremely important to seek professional advice before signing on the dotted line. It is also wise to review your chosen path as thoroughly as possible, in order to determine if a Bridging Loan is absolutely necessary.
