Bridging Loans to Bridge the Financial Gap Immediately ...

There are times when one faces a financial shortfall and has no other source of funding to meet a larger financial venture. It is during this time that bridging finance or bridging loans help that person. Also called caveat lends, these are short-term loans that help in maintaining cash flow (finance liquidity). When you take this loan, the money lender secures his money by getting a mortgage on your new property, and taking out a second mortgage on the property that you are selling.

A person usually takes bridging loans when he needs funds for

Buying a property at auction
Enabling a fast completion
Breaking mortgage chain
Raising interim business capital
Buying new residential or commercial property
Renovating property
1st or 2nd charge on existing property

A person must take this lend only if he is certain that he can repay it within 12 months. This type of acquisition finance is riskier than a regular property buyer?s lend for the lender as it is usually taken by those that have adverse credit history or those that are self employed. Considering the high risk, the rate of interest on bridging lends is much higher.

The main types of bridging loans are residential bridging lends and commercial bridging loans.

Residential bridging lends

You can secure a bridging lend on almost all kinds of residential property like:

Freehold and leasehold flats
Your main residence
Investment properties
Land with residential planning consent

For residential lend, you can borrow up to 75% of the open market value of the property, provided there is not existing debt on it. Residential loans can range anywhere between ?15,000 and ?15 million.

Commercial bridging lends

Much like residential bridging lends, you can get commercial bridging finance on freehold and leasehold commercial property, commercial property investment and land with commercial landing consent. The lender will give you 60 % of the market value of the property that should not have any existing debt on it.

People usually prefer bridging loans to commercial mortgage because bridging lends can be arranged within 5-10 days as opposed to mortgage that takes at least 4-8 weeks to process. There are properties available that give discounts for a given period of time and it?s not possible for the commercial mortgage finance to come through immediately. Usually, banks have bridging loans department and there are agencies that are connected to the lenders whereas commercial mortgage brokers are not linked with these lenders.

An important thing to keep in mind about bridging loans is that if you default in interest or lend repayment, you have a risk of losing your property. So it is advisable to consult your solicitor and ensure that the property you are buying is worth taking the risk and spending extra money on interest.

For more information on bridging loans, check out the info available online; these will help you learn to find the commercial mortgages!

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Source: http://commercialloan.elifehow.com/bridging-loans-to-bridge-the-financial-gap-immediately/?utm_source=rss&utm_medium=rss&utm_campaign=bridging-loans-to-bridge-the-financial-gap-immediately

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