When you have a property you need to renovate or sell, but you are still paying on the mortgage, it can feel as though your options are limited. However, a current mortgage doesn’t have to be a barrier to moving forward with your plans. Depending on your exact situation, you may have multiple options that will let you accomplish your goals even if you are still repaying the borrowed funds. In some cases, you don’t even have to have great credit to make your dream a reality.
One of the more common issues UK homeowners face when they have a mortgage is coordinating their finances to allow them to purchase a different home. This can happen when you family has outgrown its current home, needs to change locations or needs to downsize.
Timing the purchase of a new home with the sale of your current home might not be feasible. But it can be difficult to secure a new mortgage when your current mortgage isn’t paid in full. To help make the transition more manageable, a bridging loan can help coordinate the event more effective.
Bridging loans provide funds, secured by the value of your current property, which allows you to repay your current mortgage. Then, you can get a new mortgage on the property you are interested in purchasing with greater ease. Once your current home sells, you can pay off the remaining funds associated with the bridging loan, returning your finances to a state of normalcy.
If you want more information, go to http://www.euroguide.org/why-use-bridging-finance/buy-to-let/
Bridging loans also allow homeowners with mortgages the opportunity to renovate their property prior to a sale of for personal use. The bridging loan can tap into your home’s equity, allowing you to get the fund you need to make improvements. Once the work is complete, you can refinance your current mortgage to cover the bridging loan based on your home’s new value.
You can also sell your property at a higher price based on the improvements. Then, once the sale is finalized, you simply pay off the bridging loan and the associated mortgage.
Since bridging loans are secured by the value of your property, you can often obtain more favorable interest rates than with a regular personal loan. Additionally, the approval process may not be as stringent as those associated with unsecured loans, making it easier to go forward with your project even if you don’t have the best credit.
In some cases, proof of income isn’t required to secure a bridging loan. This can make the process move more quickly when you need to secure funds fast to manage a project. Though approval times can vary, many can receive the agreed upon amount in as little as 48 hours.
Bridging loans can have a positive or negative impact on your credit depending on how the process is managed. Failure to repay the funds as agreed can hurt your credit report and associated credit score. This can make it difficult to obtain financing in the future or may lead to higher interest rates. However, meeting the repayment obligation can reflect positively on your credit over time. This can improve your chance of being approved by lenders in the future or may even lead to lower interest rates on future loans. By handling your obligation responsibly, you can set yourself up for a brighter financial future.
May 11, 2017