Nowadays, bridging loans are becoming rather popular as a lending technique in Singapore. This loan type is more beneficial to borrowers when it is used as a temporary solution to their financial needs. This means it is a short-term loan. Here is a look at some concepts that will help you better understand Bridging loans.
What a Bridge Loan Is
The bridging loans are temporary loan facility that will offer you a steady cash-flow solution when you sell your home. This can be used to help you meet current obligations before securing payment from the bank. The other source could be your permanent income source or another secondary source of income that will be coming soon.
The bridging loans will allow a borrower to financially close the gap between current obligations and funding that they need but it is yet to be available. Therefore, it can be used to link your incoming funds with your need to meet immediate and urgent payments.
How a Bridging Loan Differs From Traditional Loans
Bridging loans are quicker solutions than traditional loans. It is for this reason that many people take this loan option. It offers you the amount you need whenever you need it to meet your financial commitments immediately typically when you sell your old house, like duty stamp fees for your new home. This is obligations that cannot be put on hold as you get a long-term loan that generally will take a long time to get approved.
Normally, bridging loans, have a faster process of application, approval, and disbursement. These are some of the things that a borrower needs to consider when they are in search of a suitable loan option. The processes need to be convenient in getting access to cash fast.
Why You Will Need a Bridging Loan
Even though the bridging loans are normally offered at higher rates of interest due to the risk involved. Taking out a bridging loan in Singapore comes with many benefits that may only be utilized by individuals that use them.
For instance, you can use a bridging loan to complete a sale of your landed property which would require a large amount of legal processing fees.
Bridging loans will also help in ensuring that individuals do not come short of a certain financial issue to meet their purchase requirements. Not to be confused by renovation loans which can be covered by personal loans, bridging loans are mainly to tide you during the gap of selling your old house and finalizing the purchase of your new one.
For you to access reliable bridging loans, you can visit any licensed moneylender in Singapore. The moneylender you choose needs to be trustworthy and have acceptable terms for your needs.
Also, make sure that the lender is legitimate and licensed to operate their business. Your moneylender needs to be able to offer you the bridging loan amount whenever you need it. The loan should also come with a reasonable repayment period that is convenient for you.
What a Lender Will Check In Your Application
Generally, a moneylender providing you with bridging loans will confirm whether you have funding coming in from another source in the near future. This is what indicates your ability to meet the set repayments in the agreed period. A lender also checks to confirm whether you have alternative sources of income.
This is in case the earning in consideration are not available due to some unforeseen circumstances or events. However, this will not be an issue when the income source being considered is your main source of income. This is because it is without risks.
For this reason, a borrower can consider the bridging loan option as a good way of raising funds promptly. This will also offer you some relief and breathing space thus freeing you from lots of stress and worries.
For instance, when you make a contingency offer on a real estate you are interested in, and a Notice to Perform is issued by the seller. Then a bridging loan would be a suitable option to consider. This is because it will let you secure some funds in advance as you await your income at a later time. This will help you acquire the property you would want to have. At the same time, you will be able to repay the amount at a later time once the income you are awaiting comes through. Thus a bridging loan will save you much time and possible loss of real estate property you have been considering to purchase.
Why Get a Bridging Loan
Once you are certain that you will be receiving some money and can confirm that you will get to access the funds in the future. You may need urgent funding now to settle some urgent obligations that have presented themselves.
As an individual getting a bridging loan easily the ideal option that is available for you. This is because you can access the funds you need fast and conveniently. You can then readily use it for the purpose you have.
Since you are certain you will be receiving funds soon enough (from your main annual earnings or from selling a possession). It will be easy for you to repay the loan amount conveniently. But when it comes to the traditional loans, you will access funds rather slowly. At the same time, the repayment period is long term and will not best for your needs.
Make sure that you confirm the loan details with your money lender. This way you can make a better decision on the choice of the loan and the lender you work with.