Bridging loanBridging loan refers to a short term loan that is taken usually for higher interest rate for covering the temporary financial short fall. It is used for covering the financial gap that occurs between buying and selling an existing property.
This loan term is measured in months than in years. The interest rate is also very high when compared to other loans. This loan is designed only as a short term loan to meet temporary financial problems arising out of buying a property. The interest rate is higher because it involves lot of risks.
As a result, the loan providers charge higher interest rates to cover their risks. This loan should be bought only if the borrower is certain about its repayment within six months. Even self- employed and people with bad credit can get this loan. But it depends upon the loan provider's decision. In a nutshell, bridging loans are short term loans with higher interest rates that are designed to meet temporary financial shortfalls.
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