Many times it is really bothersome knowing that you have a very nice sum of money which is so to speak “stuck” in a property, and you are unable to make a move. This is why bridging loans are very helpful in such cases, because you can make your move firstly and then arrange the rest. Now closed bridging loans can be said to be a deal which rests on secure grounds from the point of view that you already have an assurance that you will cash in the money from your old property, as you have already exchanged contracts.

There are plenty of offers and deals you can browse through available on the internet, or simply by going to your local bank you can get the necessary information, but never jump in for the first deal, instead gather as much information as you can. Then start and compare deals between them, to see which one would suit your needs. The real estate market is always a business which is fluctuating according to many external factors, and that is why if you are not really sure you understand what you are doing, seek the advice of a broker or other financial consultant.

Economical changes always trigger huge changes on the real estate market, meaning that the prices of properties may rise and fall with great speed and at amazing rates. If you decide to contract a closed bridging loan, learn about all the terms and conditions of application and all the extra fees you might have to pay along the way. You have to know that these bridging loans are really short term loans, meaning up to maximum 12 months (best scenario). Also, watch out because it is not always certain that you will receive an amount equaling 100% of your property’s value. Lenders tend to offer you less than the real value, because it is more convenient and assuring for them. For example if you offer land for this backup, then it is unlikely that you will receive more than 70% of its real value (land is always less valuable than a building), then if you offer a commercial property for backup there you will receive even less, around 60% of its real market value, while by offering residential property you will receive the highest of percentage, which will not exceed 85-90% of its real value.

There are great differences between the types of properties you offer as collateral, and while sometimes it may turn out very advantageous to enter this swing loan, other times it is not. For example, it is not convenient for you if you have to offer a commercial property and with the proceeds of it you will want to buy a residential property. Of course it always depends on the value of each and there are more factors to be taken into consideration and that is why it is very important that you make your own calculations even before you enter a deal.

Closed bridging loans are pretty steady and trustworthy solutions regarding acquisition of new homes but only in case you are already a home owner. In this case interest rates are lower, because there is the collateral or the guarantee for your loan (which is your old house). It works like a secured type of loan, just when you get money by backing up your loan with your property.

Your bridging loan may cover for a residential property as well as for a commercial property or even for a building plot. With this type of loan your home is at risk if you do not make your repayments on time, that is why you should contract such a loan only if you are determined and think very responsibly about this procedure. With closed bridging loans it is also important to present a good credit history, because if not than interest rates will be also higher and other extra fees might pop up.

You should always take into account that beside your loan there will be a valuation fee you’ll have to pay for, plus the arrangement fee. Staying documented is perhaps the most important thing when you want to proceed to a closed bridging loan, because this way you can avoid surprises and you can help make everything run smoothly along the way.