Posted 1 year, 1 month ago at 4:30 pm. 0 comments
By definition, Bridging Finance or Bridging Loan is a short-term loan used to purchase commercial property. This is something that can come in very handy, depending on your particular situation. There are two main points that you need to consider before you opt for a Bridging Finance package, your needs and the state of the property market.
One of the major benefits of Bridging Finance is that it will allow you to close on a property and purchase a new property before you sell your existing one. You will need to evaluate your current situation to determine if your needs justify taking on this type of finance. Will you lose the new property if you can’t offer a deposit? Would you be eligible for a discount on the purchase price if you can come up with the cash fast?
What are the existing market conditions in regard to the sale of your existing property? Is it going to be possible to sell your existing property in the time frame set out in your finance package? Most Bridging Finance typically runs for one year and will need to be paid in full at the end of the term unless it is possible to convert it into a Commercial Loan. You will also need to be aware that the interest rates will be higher on a Bridging Finance package.
If the market is slow and you do not have an urgent need for the new property, it may not be in the best interest of your business to take on this type of loan. On the other hand if the property market conditions are good, you can be out from under a Bridging Loan fast. However, it is still something that will need to make sense for your business.
If you feel taking on this type of loan is the right thing to do, you will be far better off going through a specialist Commercial Lender.
They will shorten the entire process as a specialist will know the market and they can quickly make a judgment on the best loan for you, based on your particular circumstances. Be sure to check that the loan can be converted into a conventional Commercial Finance package. You will also want to check on the type of interest rate and the costs you will entail if you do have to convert.
Most Commercial Lenders will be willing to extend the terms of your Bridging Finance package. Let’s say, for example, you have a buyer and you are waiting for the sale to close. Bridging Finance in general is much more flexible and accommodating than you might expect in this respect.
Paying back your Bridging Loan at the end of the loan term more often than not depends on your ability to sell your existing property. If it does not sell in the required time, you will be paying the existing loan on your current property, your new property and the newly converted Bridge Finance as well. If you believe this may be a possibility be sure to take a package that can be converted to a Commercial Loan if the need arises. Otherwise you may have to come up with the full Loan sum at the end of the finance term.
Need Bridging Finance in the UK? Commercial Lifeline are Bridging Finance and Commercial Mortgage specialists.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the links above are intact.
Posted 1 year, 2 months ago at 10:00 pm. 0 comments
What are the mechanics of a bridging loan and what should the consumer concern themselves with? The often advised considerations of a bridging loan are to confirm the rate payable, depending on charge type anything between .95% on first charge upwards to 1.75% on second charge and/or blended rate. Since Mday (31/10/2004) within the United Kingdom and the involvement of the FSA all charges will be clearly identified within a KFI (Key Features Illustration). There will undoubtedly be an arrangement fee of anything between 1 to 1.5% of the loan advance, however the consumer must be advised and be made aware of any ‘exit’ fees. What is also commonly overlooked by the consumer and homeowner and a vital prerequisite is an identifiable exit route out of the agreement.
Closed bridging finance is available to homeowners who have already exchanged on their intended purchase property, should completion after exchange be a drawn out affair the homeowner has the peace of mind that their property will sale i.e. an identifiable exit route.
Open bridging finance is far more high risk for the homeowner and should not be entered into lightly. This type of bridging is typically for homeowners who have found their ideal property but their sale would seem protracted and/or a buyer has not been found. Open bridging would typically attract an additional 1% over closed bridging confirming the higher risk. Lenders will also, as part of their underwriting criteria, ensure that the security property has plenty of equity. The lender would also want to see a mortgage offer along with proof that your existing property is being actively marketed.
While illustrating open bridging as somewhat high risk there are also many positives to bridging finance. There would be typically no valuation or legal fees as legal work is usually done ‘in house’. With the consumer also encroaching into the residential and commercial property auction arena, bridging loans are also an ideal means of securing the property at auction, exchange would happen on fall of the hammer and usually leaving 20 working days to completion.
Looking at the wider picture and asides from property bridging loans also offer such facilities as “buying out” a bankruptcy which can allow a consumers home and business to survive along with improving cash flow. This is also an ideal alternative to an I.V.A (Individual Voluntary Arrangement) which interferes with a credit record for a considerable period of time. In addition the fees involved in an I.V.A. can be very substantial and generally unsuitable unless there are multiple creditors.
Buy to let investments and self build projects also benefit from bridging finance. A buy to let property where a 100% retention might be imposed would be if the property is considered either uninhabitable or there is no bathroom or toilet. With self build projects or development the money is released in stages, each stage being signed off by the lenders appointed architect and then the money released.
Other instances may well be when the trustee of a deceased estate are unable to obtain probate because of unpaid taxes. if there is insufficient cash in the estate and the property can not be sold bridging is the answer. Repossessions can also be relieved even if the homeowner has received the judgment. One common misconception is that once evicted the dispossessed homeowner has lost the chance to recover their home. This is not the case as any mortgagee will want to recover their money as quickly as possible without the fuss of marketing. To calculate current bridging loan finance monthly charges on first, second and blended rates use our own bridging loan calculator at mortgage-loan-uk.net
Mortgage-Loan-UK Mortgage-Loan-UK is a premier resource for personal finance information along with an extensive collection of mortgage related calculators. Bridging loans are available with 2 day completion plans, for more information, go to residential bridging loan general information page. First Mortgage Trust are commercial bridging loan specialists.
Posted 1 year, 2 months ago at 3:09 pm. 0 comments
By definition, Bridging Finance or Bridging Loan is a short-term loan used to purchase commercial property. This is something that can come in very handy, depending on your particular situation. There are two main points that you need to consider before you opt for a Bridging Finance package, your needs and the state of the property market.
One of the major benefits of Bridging Finance is that it will allow you to close on a property and purchase a new property before you sell your existing one. You will need to evaluate your current situation to determine if your needs justify taking on this type of finance. Will you lose the new property if you can’t offer a deposit? Would you be eligible for a discount on the purchase price if you can come up with the cash fast?
What are the existing market conditions in regard to the sale of your existing property? Is it going to be possible to sell your existing property in the time frame set out in your finance package? Most Bridging Finance typically runs for one year and will need to be paid in full at the end of the term unless it is possible to convert it into a Commercial Loan. You will also need to be aware that the interest rates will be higher on a Bridging Finance package.
If the market is slow and you do not have an urgent need for the new property, it may not be in the best interest of your business to take on this type of loan. On the other hand if the property market conditions are good, you can be out from under a Bridging Loan fast. However, it is still something that will need to make sense for your business.
If you feel taking on this type of loan is the right thing to do, you will be far better off going through a specialist Commercial Lender.
They will shorten the entire process as a specialist will know the market and they can quickly make a judgment on the best loan for you, based on your particular circumstances. Be sure to check that the loan can be converted into a conventional Commercial Finance package. You will also want to check on the type of interest rate and the costs you will entail if you do have to convert.
Most Commercial Lenders will be willing to extend the terms of your Bridging Finance package. Let’s say, for example, you have a buyer and you are waiting for the sale to close. Bridging Finance in general is much more flexible and accommodating than you might expect in this respect.
Paying back your Bridging Loan at the end of the loan term more often than not depends on your ability to sell your existing property. If it does not sell in the required time, you will be paying the existing loan on your current property, your new property and the newly converted Bridge Finance as well. If you believe this may be a possibility be sure to take a package that can be converted to a Commercial Loan if the need arises. Otherwise you may have to come up with the full Loan sum at the end of the finance term.
Need Bridging Finance in the UK? Commercial Lifeline are Bridging Finance and Commercial Mortgage specialists.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the links above are intact.