Fix Your Instant Financial Problem With Bridging Finance
Bridge finance is a short term loan meant to solve instant financial problem
. These loans work great when it comes to deal in real estate and other related stuff. As the need of bridging finance arises suddenly so it is a good idea to be prepared of the things well in advance.
Establishing a good relation with lender is one of the effective ideas to deal the sudden financial crisis.
Having a good credit history is again an added benefit; this ensures a pre approved loan which means you will not need to wait in the queue.
As the name suggest the bridge loan is just to bridge the sudden financial gap, so it is understood that the borrower will pay the amount in a fortnight or a month. So, be prepared to pay the amount in a month or before.
The interest of these loans are higher and very rare these are extended to year or two.
Due to competitive market these loans are now available at lower interest rate, you just need to do a good negotiation and there are chances that you may succeed to finalize a profitable deal.
Scope from the Lenders Perspective
Lenders earn profit by charging interest on the amount taken. The interest rate is charged on the basis of time period so this means the shorter the loan period higher the interest rate. And this is the reason why most of the lender boosts up the rate of the interest in many cases. The other deciding factors for the interest rate of bridging loan includes
Off-course time or length period of the loan is must
Amount of risk present in the transaction
Credit history
Liquidity available
Collateral you are presenting to the lenders
Why you need Bridging Loans?
Bridging loans is to bridge any financial crisis. It needs financial backing in the form of collateral where borrower needs to pledge something equal to the economic value of the lending amount. These are just a security for the lenders and works as a second holding. Lets understand this with an example; suppose you are taking a loan to fix an auction, the auction is termed as collateral. These loans also prove great help for commercial enterprises who are often in need of quick currency.
Apart from interest rate you may also be charged some money for commencing and closing the transaction. So, it is suggested that you should go through the terms and condition before signing the documents.
Hope you are clear with the basics of bridging loans. Now whenever you find yourself in between any properties, say no to worry. Look for the bridging loan lenders, get the economical help from them, buy the new property and when your old is sold out pay the money back. So simple and easy!