Bridge loan video
Bridge finance options
Bridging finance other wise known as bridging loans is a financial service used primarily to raise quick and fast finance against the value of a property. this type of loan is used for short term reason, usually between 1 to 6 months however in isolated circumstance can be up to 2 years.
some of the main uses of bridging loans are as follow
- purchase of a residential or commercial property before selling the existing property
- when trying to purchase property quickly e,g at auction
- funding for property refurbishment or repair for profit
- Avoiding bankruptcy
With bridge financing it almost always requires the customer provide some sort of collateral as security against the loan, this more often than not is residential or commercial real estate, in the small few and far between cases if you have a vast business or a great relationship with the lender you can
Bridging finance almost always requires that you pledge some sort of collateral security against the loan. You could offer up commercial or private real estate that you own,or are in the process of buying, machinery and office equipment or even existing inventory. If you have outstanding business and personal credit, as well as an outstanding relationship with your lender, you might be able to secure your Bridge Finance on just a signature.
As bridging finance usually last a short while, there is a higher than usual interest rate attached to it, then a normal loan you might get from your bank. The lenders themselves make their money from the charge of the interest rate of a Bridging loan. With these loans the shorter the type of the loan means the less interest that you pay. There are several factors that also effect the rate at which the lender will charge you, the length of the loan, the amount of the risk, credit history and value of the collateral all determine what this interest will be
Since bridge finance usually lasts for a relatively short period you may find that the interest rate you are being asked to pay is slightly higher than a more conventional type of loan. Lenders make their profit by charging interest across the life of the loan. The shorter the loan period the less interest they earn. As a result many lenders will often boost the rate by a 1/2 point or more. In general, the length of the loan, the amount of risk that is present for the lender, the quality of your credit history and the liquidity and value of your collateral all are used to help determine the interest rate.