Homebuyers Could Opt For Useful Bridging Loans

Fri, 22 Feb 2008

Bridging loans could become more useful for homebuyers who are struggling to arrange suitable finance deals due to the effects of the credit crunch on financial markets, an industry expert has revealed.

Lee Tillcock, editor of Business Moneyfacts, explained that bridging loans allow homebuyers to borrow money to cover the period between purchasing their new house and selling their old one.

However, he stressed that the loans often come with very high interest rates and are typically only used for short-term solutions.

Mr Tillcock explained: "The need for bridging finance can rise during times of financial duress. Bridging finance is ideal for any situation where funds are required quickly and for short periods."

"In an environment where credit is harder to secure, bridging finance can perform an ever more important role, providing short-term solutions while that ever-more-elusive long-term mortgage is finalised."

But James Molloy, product manager for AA Legal Services, argued that the option of a bridging loan should only be considered by consumers "as a last resort".

He said: "Bridging loans should never be considered a routine factor. As with all financial products, appropriate advice in individual circumstances is essential."
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