Tighter lending conditions 'will make bridging loans more useful'
Published On 21 February 2008
The credit crunch has made it harder for people in the UK to arrange suitable finance deals and this has meant that bridging loans could become more useful for homebuyers, an industry expert has said.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, they are typically only short-term loans and usually attract very high rates of interest.
"The need for bridging finance can rise during times of financial duress," Mr Tillcock explained.
"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."
However, James Molloy, product manager for AA Legal Services, recently explained that consumers should only consider a bridging loan "as a last resort".
He explained: "Bridging loans should never be considered a routine factor. As with all financial products, appropriate advice in individual circumstances is essential."
