A Bridging Loan or a Remortgage?
A Bridging Loan is a short term loan that you normally pay over a period of no longer than 12 months as interest rates can be very high. Their advantage lies in being quick and accessible if you need the funds quickly. For example, if you are buying at an auction then a bridging loan is ideal. That said, bridging loans carry high interests and if time is on your side then a remortgage would be a much cheaper option.
Bridging Loan
Advantages of a Bridging Loan
- Speed of getting the loan
- Can borrow even if you have bad credit
Disadvantages of a Bridging Loan
- Bridging loans carry a high interest
- You have pay it back within 12 months due to the high interest
Remortgage
Advantages of a Remortgage
- Lower interest rates than a bridging loan
- More time for repayments
- A whole range of deals available from brokers
Disadvantages of a Remortgage
- Remortgaging takes longer to process than a bridging loan
- A remortgage lender will look at your credit score, level of income and how long you had your existing mortgage for.
When deciding between a bridging loan and a remortgage you must weigh up the pros and cons stated above. Never take out a bridging loan without first consulting a loan or mortgage advisor.
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