| So why would you want to take the risk and run the expense of this type of loan facility. Quite simply a bridge loan mortgage is often the difference between securing the home of your dreams, or missing out! Often when your looking for a new property, one will stand out above all others. When this happens, if you can’t sell your existing property you run the risk of losing out to buyers in a better financial position. It’s at this point that you must decide whether to risk losing the house or risk the additional expense of a bridge loan mortgage.Typically, because of the costs involved, a bridge loan mortgage has a short loan term of between six to twelve months.Because the repayment of the bridge loan is dependent on the sale of your existing property to release the necessary funds, most lenders charge high interest rates on bridge loan mortgages. Typically the borrower will have to begin making interest only payments after six months if the house still hasn’t been sold.
Whilst a bridge loan mortgage can ensure you secure your dream home, it is a very expensive option, and you should consider you financial ability to meet the repayments over a prolonged period should your property not sell quickly. In effect you are paying interest on two property loans simultaneously, so if your original property fails to sell quickly you could soon find yourself considerably out of pocket and unable to meet your repayments. Not only that, but the interest rates charged on a bridge loan mortgage are very high. You must seriously weigh up just how much you want your dream home, because every month you pay additional interest on a bridge loan mortgage you are effectively increasing the purchase price of your new home. Before you take out a bridge loan mortgage you should seek independent advice from a financial adviser from the real estate market.
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