Bridging Loan Demand on the Rise, Warnings Issued to Borrowers
(PRWEB) April 3, 2007
Bridging Loan providers, PersonalLoansMadeEasy.co.uk, have issued a warning to consumers to make sure they fully understand the differences in interest rates offered on bridging loans and commercial bridging finance to normal rates of APR (Annual Percentage Rate).
Manager of PersonalLoansMadeEasy.co.uk, Steve Wild, says “We have seen a surge in demand for this type of loan recently. It’s a bit early to say what is responsible for this, but we are hearing from more and more people who desperately need to fund the gap between monies being released from a property sold and money needed to purchase a property, as well as people needing cash quickly for properties bought at auction.
“Bridging finance is really a distress product and usually only turned to as a matter of last resort when all other financial avenues have turned into cul-de-sacs. Monies lent for bridging purposes are usually charged on a monthly basis, so an interest rate of 1.5% or 2% sounds low, but people need to realise this is on a monthly basis, not an annual percentage rate.
“It is extra important that consumers are aware of this before applying as they are usually in a stressful situation when applying for bridging loans therefore they need to be vigilant against misunderstanding interest rate charges.”
PersonalLoansMadeEasy.co.uk offer secured loans for all circumstances, as well as a Loans Blog to help answer customer questions about loans in general.
“Product information and absolute transparency are our mantras, especially as it helps make us more efficient not taking applications from people who are expecting to pay only a few hundred pounds interest on a £250,000 loan. They should be aware of the fact that it is more likely to be in the thousands as our lending panel are taking considerable short terms risks, but we are digging clients out of short term holes — something there seems to be more and more of”, continued Steve.
Bridging loans are sometimes also known as “caveat loans” and are often lent in days rather than weeks, another reason for the higher leverage needed by the lenders to make it worth lending. With thousands of endowment mortgages expected to come to and end soon, with shortfalls, bridging loans could be set to rise in demand for some considerable time to come.
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