Dev Singhraha
Relocation Expert
Bridge loans are a relatively new concept in the Indian market, and not many people are aware of it. To define in simple terms, Bridge loans are the loans which are given to the new property in terms of the existing property.

Let’s explain it further. If you are looking to buy a property by selling the existing property and putting the money from it to fund the new property but you are not finding the right buyer who is quoting you the right price. In such a case, one can opt for a bridge loan. Bridge loans help in financing the person to buy the new property until they have found a buyer for their existing property. The Bridge loans are generally given for six to twelve months with a maximum time of two years. One can opt for bridge loans for both under construction as well as ready to move in properties.

Generally, there are no foreclosing charges for bridge loans, and the interest rates range from 11 to 18 percent. One can also get a bridge loan even if they have a bad credit score. Since the document required for the same is less, it is gaining more attention in the market. Recently it has been launched in India by the Piramal Capital and Housing Finance Company.

Before opting for the bridge loans, keep these in mind:

  • Since bridge loans are the only stop-gap arrangement, they must be repaid in the given time frame. Be sure of the repayment strategy before you take the loan.
  • If you are unable to pay the bridge loan on time, then it changes to home loan and treats it as a new application for the home loan. One must repay the entire loan amount before this happens.
  • Do your cost planning properly. If you are not able to sell the property in the quoted amount, then you will end up paying more bridge amount. Not to mention the GST applicable will increase the cost of the loan as well.
  • Compare all the other schemes in the market before you opt for a bridge loan. If you can get a better deal from any other bridge loan provider, then go for it. Keep your option open.

Documents required:

Different financial institutions ask for different documentation, but in general, they follow a similar documentation process.

1.    Papers required:

  • Employer ID card
  • Completed loan application with photograph
  • Identity proof
  • Address proof

2.    Property papers:

  • Registered agreement of sale
  • Permission of construction
  • Occupancy certificate
  • Share certificate, maintenance bill, electricity bill, property tax receipt
  • Approved plan cope, conveyance deed
  • Payment receipt from bank or builder

3.    Account Statement:

  • Account statement from last six months
  • If there is any other loan, then the loan account statement from last year.

4.    Income Proof:

  • Salary slip or salary certificate from the last three months.
  • Cope with IT return
  • If you are a self-employed person, then the business address proof
  • IT returns for the previous three years
  • TDS certificate
  • Certificate of qualification.
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