Secured Loans

Secured Bridging Loans

Secured bridging loans can come in very, very handy if you are looking for a quick loan secured against a property. Getting credit is a big part of the way people in the UK make up their budgets and purchase things they want. Bridging loans are a form of credit you may not have previously considered but can actually be great value and really work in your favour. They involve backing up the agreement with an asset so they are considered secured but in many ways they are less of a risk than other, similar loans. This guide to bridging credit products will show you how these products might work in your favour and help you avoid needing a consolidation secured loan.

How They Work

Secured bridging loans are credit products which come secured against an item of property most commonly the debtors home. The repayment on the original capital value is done over an agreed term of time on a month to month basis. The debtor must meet each payment or they risk defaulting. Defaulting on bridging loans can result in the seizure of the property that was put up as collateral so debtors need to budget correctly and have a clear plan to repay the debt.

The idea of getting such a product is that it will help out with a short term cash problem you might have due to the purchase of a new property of some kind. A good example can be illustrated as follows. Say you are currently finishing up the payments of a mortgage on your current property, at which point you intend to sell it in order to buy a new house. The new house you wish to buy without the need for a further mortgage and you believe that you should get enough due to the valuation of your original home.

Then, when you come to sell, you find the valuation was overestimated and you are short the amount of cash that was required to buy the next property. Taking out secured bridging loans at this point will help make up the difference in the selling price of the old house and the buying price of the new one. This will generally be done by asset backing through the second property but not doing it to the same extent as a full on mortgage would. The bridging loans can therefore be seen as micro mortgages - they fulfil the same basic purpose of buying a home you cannot yet afford but do not tie you to a long term of repayments and do not release the same level of capital.

High Risk for Lenders

The thing to keep in mind most from both the debtor and lenders points of view is that secured bridging loans are high risk ventures. The speed with which they need to be granted also means the lender will expect a very quick turnaround on the payment. If payment is missed things can turn very nasty, very quickly. The lender will not be in a position to negotiate as they took a big risk on the product and need it to pay-off or else it was not worthwhile from their perspective.

This means that budgeting is more important than ever for the debtor. Basically if you are considering secured bridging loans you need to make sure the budget you have worked out to repay them is realistic and factored to a T. If you cannot meet these payments in 6 months you may want to consider other options or even a different property purchase. Secured lending like this is a risky business and needs careful planning.

Finding the Right Loans

Secured bridging loans are widely available in the UK and getting one is often easier than getting an unsecured personal loan or a mortgage. As these secured loans are so heavily asset backed the debtor does not need to have a particularly strong credit history and the self-employed are also more likely to be considered. Take your time looking at secured bridging loans, however, and choose your loan carefully. There are many different bridging products out there and once you apply the turnaround is rapid, you have time to make sure the terms suit your budget.

Getting secured bridging loans is a popular way for many in the UK to secure the homes they wish to live in, even when the value of their original property does not match the new one. They are pretty risky venture so you need a solid budget to purchase one but if you are sure of your ability to repay quickly then secured bridging products might be the right thing for you. Begin your search for secured bridging loans today and find out which is the best lender for you.