| | - As opposed to closed bridging loans, open bridging loans are much riskier from many points of view. Firstly, there is no exchange of contracts involved which means that you wish to buy a new property, but there is no assurance whether and when will your old property be sold. That is why open bridging loans are not that easy to obtain, and are unforeseeable in a way.
- You can contract a bridging loan in order to buy residential properties, commercial properties or even building plots, and you can use as backup for your loan many types of properties like: residential developments, offices, retail, land, even a property which is part commercial and part residential. As seen, there is a wide range of type of properties you can use for the swing loan, and from this point of view an open bridging loan is flexible. Of course you will never get the real market value for any of these, even more because it is an open bridging loan. You always have to act with utmost precaution when it comes to this type of loans, as in the case you fall behind with your payments your home may be repossessed at any moment. And where you wanted to make a good deal, you’ll end up without a roof above your head.
- Having in mind that this kind of loan too can be used many times just for any purpose, definitely stay away from contracting money and putting your home at risk just to make a risky business or other investment that you are not sure of the outturns of. Use open bridging loans just in case you have thought about it carefully and you really wish to acquire another home for you and your family.
- Open, just as its very name suggests can mean insecurity, uncertainty and this is why you need to act accordingly. There are many offers you can browse through; practically with a simple click you may have access to a lot of information. Don’t let yourself influenced by very good deals at first glance, always dig deeper and learn about all their extra fees like valuation or arrangement fee or who knows what other fees there may be included. Then it is very important that you know what interest rate you will be paying as well as the time of repayment.
- The time of repayment is very important in the case of an open bridging loan because there is no whatever guarantee as to when will you be able to sell your property. So, the longer the repayments term the better, and don’t expect nothing longer then 6 months (although there are many lenders advertising themselves as offering a repayment period of 36 months, but there are some more strict criterias involved).
- Open bridging loans always offer a much smaller percentage of the real value of your property then a closed bridging loan. Also, interest rates are higher, there is the base rate fixed by them plus another 2% usually. That is why even before turning to the option of an open bridging loan, you should try to learn as much as you can about the real estate market in general, especially everything related to the property you wish to sell in the future. Learn about its value, if there are potential clients interested, browse similar home offers at real estate agencies or newspapers, everything where you cold get some useful information.
- You have to be at least sure of yourself that if you contract an open bridging loan you will be able to sell your home within the time your loan expires. It will take some time until you learn about the ups and downs of the market, but be sure that it will be of great help, and when you face the lender you will already have an important documentation behind you, so chances of being trapped are almost non existent.
|
|
