subject: Bridging Finance: A Modern Financial Option [print this page] Modern day applications for loans entail substantive and inherent costs.It is important to know that when securing a loan these days, there are certain fees, such as legal fees, handling and other transaction fees that go with it. In bridging finance, legal fees may be coursed through an intervening attorney before the filing of the loan in order that swift transfer of funds may be made. Should the sponsoring bank choose not to forward the bank fees and legal costs, the purchaser has the obligation to pay for them.
If the purchaser does not have the funds to pay them then the purchaser may then apply for bridging finance, a short term loan that may be availed of to get the necessary funds to answer for obligations that would be paid with future earnings. A residential loan and transfer relies mainly from earnings made from the selling of an existing property in a lot of instances.The subsequent property would only be transferred to the purchaser when the security bond for the existing property has been effectively cancelled with a consummated sale. Delays in the processing of the transfer could result in multiple delays from the other aspects of the transaction.
Bridging finance banks can offer up to 80 percent payment of the expected revenue from the sale of an existing property before documentation and transfer, in order to avoid unnecessary procedural delays. The property seller can thus get the needed funds to address his financial shortfall. It may seem complicated, but bridging finance is comparably a forthright process that is clearly understood by intervening attorneys.Home renovations can also make use of bridging finance requiring only the registration of an already existing security bond for the property.
With this financing, the delays in processing which could take up to 2 months may considerably be avoided, thus generating savings on money, time and effort.The company who handles the bridging finance would definitely charge a certain amount of compensation, and this is usually a high amount of money, depending on the loan amount and the period for which the loan was granted. Bridging finance is usually given over the period of only one to 3 months, owing to its nature of being a short term arrangement.
Interest charges usually fluctuate between 3 and 5 percent of the principal amount, and these rates are constant even if the loan has a longer maturity period. There has to be proper evaluation of the price of bridging finance in terms of the benefits it offers with fast financial solutions and the time and effort saved in such exercise. It must be remembered that the faster the transfer of funds is made, the less cost it would be for the borrower in terms of interest accrued.
Bridging Finance: A Modern Financial Option
By: Terro White
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