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Instalment Loans vs. Short-Term Loans

Both instalment loans and short-term loans have their benefits for borrowers. It is important that you learn as much as possible about these different types of loans before choosing which one to apply for. Selecting the right loan product will ensure that you get exactly what you need without any unnecessary hassle. The more time you spend learning about these loan options, the better off you will be financially.

Short-Term Loans

Short-term loans, otherwise known as payday or cash advance loans, are given out in amounts that vary from £200 to over £1,000. These loans usually have a term of two to four weeks, depending on the lender and amount that is borrowed. You can get a short-term loan from a bank or credit union, though private lenders have been dominating this loan product for a while now.

Some of the benefits associated with short-term loans include:

• Easy to get: Short-term payday loans tend to be very easy for a majority of people to get, even those with bad credit. As long as you have a stable job and adequate income, approval shouldn’t be an issue.
• They are fast: There is no question that short-term loans can help you get the money you need quickly. If you have some emergency expense you need to cover, a short-term loan is a great option.
• Convenience: The sheer convenience that these loans offer is also worth considering. There are lots of brick-and-mortar businesses that give out payday loans, but you can also apply online. This means that you can get the loan you need without ever taking a step out your front door. The whole process is very easy and simple.
• Lender options: There are tons of private lenders that you can get a short-term loan from, so you are bound to find one that can help you out.
A few of the drawbacks associated with short-term loans include:
• Higher rates: A lot of people who opt for short-term loans end up paying higher interest rates. This is simply the price you have to pay for a quick and convenient loan.
• Scammers: There are a lot of reputable private lenders that give out short-term loans, but there are also quite a few scammers. It is important that you are aware of this so you don’t get taken advantage of.

Who Should get a Short-Term Loan?

Those who need money right away for something important should think about getting a short-term or payday loan. These loans are given out very quickly and easily to most people. Whether you need to cover some home repairs or some other crucial expense, this is an excellent borrowing option. These loans are also a great choice if you have bad credit. A lot of private lenders do run credit checks on applicants, but you certainly don’t need a high credit rating to get approved.

Instalment Loans

Unlike short-term loans, instalment loans are given out in larger amounts over longer periods of time. Some of these loans have a term of a few months while others can stretch out over years. It all depends on the amount you borrow. Interest rates on these loans tend to be lower than short-term loans. A majority of loans are considered instalment loans, including mortgages and car loans. If you need to borrow a larger sum of money over a longer period of time, you will most likely need to apply for an instalment loan.

Some of the biggest benefits offered by instalment loans include:

• Fixed rates: The fixed interest rates that are closely associated with instalment loans will make your monthly payments very predictable. While you can sometimes opt for an adjustable rate for your loan, it is subject to change over time.
• Longer payback periods: With an instalment loan you will have longer to pay back the money you borrow. This will take some of the stress out of borrowing.
• Quick and easy: It usually doesn’t take very long to get the money you need with an instalment loan. You can choose to have the money transferred right into your bank account if you are approved.
Some of the drawbacks of instalment loans include:
• Potentially high rates: The interest rates on long-term loans are sometimes high, but not nearly as high as with short-term loans. The more time you take to find the right lender, the better your rate is going to be.
• Penalties: There are penalties for missed payments on most instalment loans. These penalties can cost you quite a bit extra if you fail to make your payments on time.
• Collateral: Often times collateral is required to get an instalment loan. The property you use as collateral will be taken by the lender to pay the remainder of the loan if you default on it.

Who Should get an Instalment Loan?

Instalments loans are best for those who need to borrow a large amount of money for something like a new house or car. You will have a lot longer to pay off the money you borrow. If you need to borrow from than a few hundred pounds, you should definitely consider getting this type of loan. You don’t need to have perfect credit, but a high credit rating certainly helps.

Final Thoughts

There are many different kinds of loans to choose from, so you will need to consider your specific needs before making a decision. Instalment loans and short-term loans both have a lot to offer, but you will have to choose the option that works best for your situation. Make sure that you also take enough time to find a good lender that is flexible and willing to work with you. You can get both types of loans from many different lenders, and it’s important to do your research before making a decision. Either way you should go online to apply because of how easy and convenient it is to do so.

Everything You Need to Know About Bridging Loans

Bridging loans have become a popular method of borrowing for many people in the UK, particularly in the London area. If you need to borrow money for just about anything, you should really look into this option. These loans have helped many people to get the funds they required within a very short amount of time. While there are lots of loan options that are available to the average person, not all of them are quite as ideal as this one.

What are Bridging Loans?

If you are trying to purchase property before you sell your own home, a bridging loan could be helpful. These are essentially just short-term loans that people take out when they are in a desperate financial situation. Those who want to sell their home quickly after completing renovation work on it will also want to look into these loans.

Advantages of Bridging Loans

There are many advantages associated with bridging loans that you should be aware of before making a decision.

• Purchase property right away: With the help of a bridging loan, you can get the property you want before you even sell your current home.
• Better price: A bridging loan can also help you get more for your home when you are selling it, as you won’t be forced to sell it as soon as possible.
• Pay only one mortgage: When you take out this type of loan, you won’t have to make any payments until you sell your current home. This means that you’ll only have the one mortgage to cover.
• Low interest rates: Today there are many bridging loan options that you can take advantage of to get a fair rate.
• Minimal fees: There aren’t any discharge fees or break costs that come with getting a bridging loan, making them easier to pay off on time.
• No need to rent: If you’d rather not to have to rent a place and move again, a bridging loan is a good option to consider.

Drawbacks of Bridging Loans

There are some drawbacks associated with bridging loans, including:

• Compounded interest: Because interested is compounded on a monthly basis, you could end up spending quite a lot depending on how long it takes to sell your home.
• Valuation costs: If you decide to get a bridging loan, you will have to pay for two different valuations—one for your current home and another for your new one.
• Potentially high interest rate: If you don’t sell your property fast enough, you could end up with quite a high interest rate. You will need to know what the bridging period is so you know exactly how much time you have to sell.

Types of Bridging Loans

There are two different types of bridging loans—opened and closed. You will need to understand the difference between these two kinds of loans before you can make a decision on one.

Closed bridging loans are where you set a date that your property must be sold by, and the loan itself must be settled by then as well. These loans are somewhat risky, so you should be fairly confident that you can sell your home by the agreed upon date.
Open bridging loans are ideal for those who have found the property they want to buy but have not yet listed their own home on the market. These loans are far less risky, simply because only people who have exchanged on the sale of their current home can get them. It is highly recommended that you have a decent amount of equity in your home in the event that the sale does not go through.

Deposit

You will be required to have a minimum of 20% of the total debt amount to purchase the new property you want with this type of financing. You do have the option of applying for a deposit bond, which is essentially an insurance company’s guarantee that the purchase will be completed. It is important that you apply for a deposit bond right after getting approval from your lender.

Deposit bonds cost just over 1% of the total deposit amount. You should make a point of using an online deposit bond calculator to get the details you need before making a decision.

Bridging Loans for Construction Expenses

A majority of lenders will be very reluctant to approve bridging loans for the purpose of building properties. You might be able to get one of these loans if you can convince the lender that construction will be done within six months. You will need to make repayments for the new loan and existing mortgage, but you’ll have a year to pay it all off.

Other Considerations

If you have decided to apply for a bridging loan, it’s important to avoid overestimating how much you will get for your current property. Those who make this mistake usually find that they don’t have quite enough to pay back the loan they have taken out. You can capitalise on your repayments, but you’ll need to satisfy the loan-to-value ratio requirements of your lender.

Should I get a Bridging Loan?

A lot of people can benefit from bridging loans, but it is important that you consider your financial situation before moving forward. You also need to think about how much you can realistically get for your home, and when you expect to sell it. The last thing you want to do is to take out a bridging loan without carefully considering all of these factors.

Those who take out a bridging loan should ideally have a minimum of 50% equity in their current home. Also, remember that it can take a while to sell a house. Sometimes it can take a couple of months to settle everything, so keep this in mind. You shouldn’t rush into getting this type of loan, because it can leave you with some fairly large debt if you can’t pay it back.