Advantages and disadvantages of Bridge Loans Bridge loans can be easily and quickly arranged. The lender may also allow the borrower to repay the bridge loan when it matures rather than paying the interest monthly.
The major disadvantage of bridge loans is that the interest rate is usually higher than other types of loans. And because the interest is paid monthly, the interest will add up to a very high amount eventually. Interest rate is also a few percent higher than the current base rate, and additional fees may be required for loan security.
It is also important that the borrower realizes that he needs to juggle two payments - the bridge loan's, and the mortgage repayment. This may be hard to juggle, and can get you into serious complications with the lender and might even lead to repossession of your home.
In the unfortunate event that the bridge loan reaches its maturity but the property is still not sold, lenders usually allow the bridge loans to be changed to a conventional loan without penalty. However, it is wise to ask the lender beforehand if he is open to such should the circumstances call for it.

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