A bridge loan/ swing loan/ gap financing is a short term for a temporary loan used to secure the purchase of any asset tangible or intangible till the long term financing has been arranged. A bridge loan allows a person to purchase a new house or land for himself before selling his old property. This loan will allow him to provide the funds necessary to finance a new house with the intention of these funds being repaid when the old property is being sold out. These loans are mostly risky and expensive because the person has no idea when his old property will be sold out within the price he has anticipated. These loans are available at higher interest rates than other conventional mortgage loans. This loan can give you flexibility but a person should be fully aware of his circumstances before availing this type of loan.
These loans are best suited for big property developers and land lords who earn nice amounts of money from the property and who have sufficient funds available so that in the case of delay in sale of property they might be able to pay the loan from other sources. The bridging loan advisor can easily convince people to avail this type of loan as there is a win-win situation for everyone. Everyone wants to live in a new house with luxurious facilities. As there is flexibility from the lenders or financial institutions side in terms of documents and criterion for this loan. Mostly the lien is marked on the existing property that in the case of no payment, the bank has the right to sell this property and recover the loan amount.
After the financial crises and all the inflation problems all over the world it becomes very difficult for the sales representatives or any loan advisor to promote their product in front of the general public. Mostly people couldn’t afford that due to their limited salary income. Secondly, people are mostly aware these days and they have complete details of mark-up and other things associated with this. A financial institution person or representatives couldn’t hide anything these days from them to promote or sell their product. The job of bridging loan advisor is very demanding these days as he/she has to convince people and create awareness among people about these loans. The area, segment and niche is very important in this case because this type of loans is very expensive and not for lower middle class people. It generally caters big property dealers, developers and land lords who have sufficient funds available.
Jimmy Lloyd, a financial expert from Get Bridging Loan, says "In order to make this job profitable, a bridging loan advisor has to work in this niche and find other segments because otherwise in this era of immense competition it becomes difficult to survive".