Should You Use a Personal Loan to Bridge the Gap?
When looking at combining personal loans with bridging finance, there are two important questions to ask. The first is ‘can I use a personal loan to bridge the gap?’ – the answer is yes, assuming the lender is aware of the intended use and the purpose falls within an accepted category. The second is ‘should I use a personal loan to bridge the gap?’, and this is where things start to get a little trickier.
Rise of Bridging Loans
Surprisingly, for some borrowers, using a personal loan as bridging finance might actually be quite a sensible option. While reports suggest that the average bridging loan in the UK is estimated to be around £450,000 – about the same price as a London property in 2015 – not all buyers require this amount. Those that require less due to personal savings or income may benefit from the advantages that come with lower personal loans, such as greater flexibility in terms of age and income. Assuming a personal loan comes with no early repayment charges – something that first4commercial.com is committed to – a short term personal financing could be a suitable solution when buying and selling property in the UK or abroad.
There are, however, two sides to the coin. Lenders who are aware of a personal loan being used for bridging purposes may deem the risk to be higher and could react by setting higher interest rates which could make a personal loan a less cost effective option, particularly for those planning on taking out larger amounts to fully finance a new purchase. Whatever type of loan you think would match your needs, first4commercial.com can help.