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Bridging
finance is like a bridge between two loans
that helps you to get the instant issue
solved. This is also called Bridge loan.
Obviously, it is a short term loan that
provides funding for additional business
or personal purposes. The loan helps towards
the deficiency part of the amount you need
at the time of additional business, personal
purposes. This loan is also provided on
the purchase of a new property, while sales
an existing property. The transactions occur
simultaneously, while sale of one property
and the purchase of another property. The
bridge loan only makes such transactions
possible. Hence, the Bridge loan can be
provided either for business or for personal
reasons.
In
fact, bridge loan enables you to buy a dream
home when you find it and you can manage
to sell your existing property at out rate.
It makes you comfortable to start or develop
a business with an additional bridging finance.
Bridge
Loan for Property/Home
Usually
the financial transaction is become
crucial when to get a desired property
against your existing one. At that time
you need to apply for a bridge loan
to get rid of the problem. Generally,
your existing property may not give
you the right price to buy a new one
immediately. So there may be a deficiency
that pools you into a trouble. Your
agent may be in a hurry to make this
transaction earliest. Sometimes, you
are ready to sale or purchase, but your
buyer or seller is either not ready,
or has just dropped out the case. You
can't afford to do that without the
proceeds from the sale of your home.
What can you do? This is where the bridging
loan comes in the picture to solve your
problem.
Bridge
Loan for Business
The
financial transaction is also very crucial
when you need an amount for business development
or improvement to make success an instant
project. The instant project gives you instance
benefit and you need to start and finish
within a certain time. In this case the
continuing financer provides you the bridge
loan to run your instant project. This is
very easy to process and your purpose can
be solved in right time.
Personal
Bridge Loan
Sometimes
you need a quick finance having an existing
loan with a financer. There is no other
way to get finance from a different bank
or finance. You will be eligible to get
a bridge loan by showing the exact and beneficiary
scheme to the financer. The continuing financer
never hesitates to sanction a bridge loan
if all the situations favor you.
Low
cost bridge loans
Bridging
loans are designed to suit your individual
requirements and the financer accesses
to exclusive lending facilities and
can beat or match any arrangements that
you may have already been offered. As
you know the terms are available from
1-12 months with extensions available
(sometimes up to two years). Interest
rates are very competitive and can be
as little as 1% per month. There is
a flexible approach to bridging finance
and can be arranged loans for people
with a good or bad credit history, the
self employed and limited companies
with no accounts.
Case
study
The
financers offer you financial assistance
that is customized to meet your individual
needs. Financers can sanction bridging
loans on all types of property, whether
it may be residential or commercial;
an open-door policy even allows property
not owned by you to be used as security,
providing the owner is party to the
bridging loan. Some financers look into
your credit history before the sanction.
A specialist bridging finance broker
can guide you the best possible according
to your status, circumstances, requirements
and conditions. Sometimes the situation
guides you to go for a Bridging Finance.
There are some examples:
Case
1 If you have an existing
home loan with a financer and require
finance to meet the short term gap in
the timing between receiving the funds
from the sale of your home and buying
a new property i.e. your sales and purchase
settlements are on different days. To
meet this short-term need, the same
financer can increase your existing
home loan to include the amount required
for the new purchase.
Case
2 You may require funds for
a short period of time to purchase a
new property and then plan to repay
the loan in full from the proceeds of
the sale of your present property. To
facilitate this, the financer could
provide a home loan with a term of six
months to 12 months during construction
of house.
Case
3 If you have an existing
home loan with a financer and want another
financer to manage your bridging finance needs. To assist with this, your existing
loan will be transferred to the second
financer you selected.
Some
of BridgingFinance features are offered
by financers.
Easy methods for sanction.
Flexible repayment options.
Standard Loan Approval Fees apply.
Interest-only repayments during the
bridging finance period.
Conversion to
Upon receiving the proceeds from the
sale of the current property and clearance
of the bridging finance loan, the remaining
home loan can revert to principal and
interest repayments payable weekly,
fortnightly or monthly.
Interest-only available for up to 10
years.
Individuals and Companies
conventional loan without paying a penalty
Discharged Bankrupts
Self-Employed (no accounts necessary)
Fast and flexible (The minimum period
is one month and the maximum period
is 12 months.)
The
following benefits of Bridging Finance:
You can avail fast and flexible loan
You are able to purchase a new property
without having to sell your existing
property first.
Short term loan for improve your business
etc.
If you are building a new property you
may remain in your existing home until
completion.
A bridging loan term of six to 12 months
means less pressure to sell quickly.
The Variable Rate of interest applies
instead of paying an inflated bridging
rate, which means interest savings
for you.
Flexible
repayment plan to suit your personal
needs
The following securities are accepted
for Bridging Loans:
On Residential Properties
On Auction Properties
Development Sites or business
Buy to Let Properties
Start or improve Retail Shops
Land with construction permission
Commercial & Semi-Commercial Properties
Processing
and Repayment
Bridge
loans are primarily short term in nature.
The process for obtaining a bridge loan
is similar to that of most types of
loans. As other types loans the repayment
methods are not same rather the processing
method. Bridge loans typically are structured
as interest only loans meaning that
the borrower pays only the interest
on the loan each time. The borrower
continues with this repayment plan until
the property loan is being used for
is sold. When the sale finally does
occur, the proceeds of that sale are
used to repay the principal. The principal
payment typically is in the form of
a one-time, lump-sum payment. This advisable
that before you go for this typical
loan, you should have an interview with
a lender who has experience with this
type of loan.
The
capital can be paid before the business
ends or the property sold out. Or the
bridge loan can be converted to the
conventional loan without paying a penalty,
before the property is not sold and
the bridge loan matures. This needs
a clear knowledge from the financers
earlier.
The
interest rate
The
interest rates are differently assigned
according to the criteria defined before
the loan sanctioned. There are several factors:
the anticipated risk associated with the
bridge loan, and the prevailing interest
rates and a premium added by the lender.
Since bridge loans are short-term (Six months
to two years), the lender has a short time
to make money on the deal. The profit is
derived from the interest rate. Only the
interest is to be paid monthly on a bridge
loan. Expect to pay off the bridge loan
in full, usually as a one time payment (called
balloon payment), as soon as the property
is sold or the business ends.
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