The truly big investments or expenses, like buying a house/apartment, purchasing a car, doing massive renovation work, making business investments, etc. can put a dent in your wallet. Usually, loans need to be taken out for such expenses, and the loans are paid out over a long period of time, at high interest rates. The good news is that there are a few short term solutions as well, which don’t result in you paying through the nose.
Bridging Loans for Buying New Property
Companies like the Alternative Bridging Corporation Ltd. Can provide a short-term solution to buying new property, even before the current property is sold off. This has a number of advantages, which can be listed as follows:
Moving Seamlessly – Moving is a big, confusing process, which gets more and more expensive and complicated, the further your new home is from your current location. A bridging loan allows you to buy the property, make the necessary renovations and furnish the place, before selling your current home and moving to your newly furnished house/apartment.
Lasts Only 6 – 12 Months – As the residential bridging loan is given out on your current residence to facilitate a quick real estate purchase, it can be paid off in a matter of just 6 – 12 months, which is ideally what you would want, once the old property is sold off.
A Hefty Down Payment
When you are trying to find a way to reduce the loan duration without having to suffer the penalties, extra charges and a hit to your credit score, foreclosure is likely not a desirable option!
On the other hand, when you have the money to pay off the remaining loan amount, neither should you have to pay the high interest rates every month, which can amount to a lot of extra money at the end of a long-term loan. To avoid such situations, a big down payment is quite a feasible option.
Although the interest rates may stay the same, the amount of interest charged will be significantly lower, given the balance on the remaining loan amount is also going to be lower.
Of course, you will be a lot lighter when the down payment made is particularly hefty, but at the end of the loan tenure, the amount of money saved makes it a worthy initial investment. Additionally, the down payment will also allow you to take the shortest allowed payback tenure, without letting the increasing EMI affect you as much.
A Loan Taken on an FD
If you or someone close to you has a fixed deposit in the bank, it might be possible for you to take a loan out against it. Depending on the bank in question, the interest rates will vary, but most banks allow a short-term payback timeline, as it’s essentially your money that you are taking a loan out against. However, during this time, the bank will charge you significantly higher interest rates than what it is paying you for keeping the Fixed Deposit with them.
The general idea is to avoid taking out loans for unnecessary things such as smartphones, laptops and other electronic gadgets when you can pay for them upfront. It reduces your overall interest pay-outs, and saves money for the really big financial investments.