Bridging Finance
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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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