Benefits of Using Bridging Loans

Bridging loans are often viewed as a very useful option to have during the sale and purchase of home, and in many cases they present the only option to ensuring a sale goes through on time or securing that dream home. This is especially true in times of economic uncertainty and the slow down of the property market.

There is a degree of risk involved for banks when lending bridging loans, and this is typically reflected in the higher than normal interest rates, as well as arrangement fees which are commonplace with most loans. As security, banks will usually take your property against the value of the loan; therefore it is important that such loans are only taken out in the right situation or circumstance.

Usually, bridging loans are sought by homeowners when there is a delay in exchange between two properties. However, it is also possible to secure a loan if a new home is bought before your existing home is sold - although extreme care needs to be taken in such situations to avoid excessive interest rate payments on the loan.

There are two options available to those interested in a bridging loan. The first is an Open Bridging loan, which is made available to people who have had an offer accepted on a new home but have as yet to sell their existing home. Conditions for this type of loan will usually require a degree of equity within your existing home, as security risks are high for both borrower and lender.

The second and most commonly used is a Closed Bridging loan. This is offered to people who have exchanged contracts on both their existing and new properties, but are experiencing a delay in finalising terms and conditions. Therefore, a bridging loan is often essential to ensure the sale is completed.

If you are considering taking out a bridging loan, be sure to discuss the matter in some detail with your bank or lender to ensure you are fully aware of the repayment requirements of the loan. New home buyers who plan to take out a bridging loan must ensure they have enough earnings to cover the repayments on two mortgages.

For buyers with problems in the sale of their home or who are experiencing delays in exchanging contracts on a new home, bridging loans can provide a useful solution. Knowing the fine details of this increasingly common requirement for house purchases is often the key to ensuring the right loan is chosen for the right situation.

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Effective Loan Letter For a Bank Loan

Due to the recent credit crunch getting a loan from a bank in the US or the UK can be quite difficult particularly as a lot of people are now burdened with bad credit scores. There are still financial institutions that are prepared to give out loans and one way of securing a loan is to send a loan request letter to your bank of choice.

For the best chance of securing the loan you will need to do your homework and make sure you put together a well composed, easy to read and sensible letter that provides the bank with all the information they need to assess your request.

How to write a letter and what to include

Make sure that the letter is legible, there is nothing that will put someone off more than if they can't read your writing. If at all possible try and gain access to a computer or typewriter so that you can print or type out your letter.

Also take care with your spelling and grammar, use a spell checker if possible and read through carefully what you have written. The letter must be formal in nature and come across as business like.

The bank will require the following information: -

• Your name
• Your address
• Your telephone number
• Your profession or job
• Your age (you will need to be 18 years old for a loan in the USA and/or UK)
• Your monthly income
• Your monthly expenditures
• How much you would like to borrow (be realistic)
• What level of monthly payments you can afford (be realistic)

If you have a bad credit rating do not try and hide that fact, just explain the situation rationally, say why you have a bad credit rating and ideally what action you are taking to resolve it.

There are a lot of people with bad credit rating at the moment, so you will not be alone. If you are honest and convey the message that you are taking steps to resolve the situation with full intentions to repay your debts on time and to the terms of the loan this will carry a good argument for securing your loan.

When you send the letter to the bank it is a good idea to use registered mail and to get a receipt of delivery when it reaches the bank. That way you can be sure it has not been lost in the post and that the bank has taken delivery.

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