March 29th, 2012 by admin
Difference Between Bridging Loans and Bridging Finance
Almost everyone requires a loan at one time or another. But there are several different kinds of loans that you can choose from. If you have been advised Bridging loans or a bridging finance, you have to know the difference between them. So here goes.Bridging finance is usually offered to large contractors like property developers who will get regular infusions of cash from customers who have bought property from the developer. That means, bridging finance can help a developer complete his project with cash from the bank while being reimbursed by customers. These loans are far less risky for the lender as the property developer or borrower will get a guaranteed income from customers. The rate of interest is lower too and the lender knows that there is property attached to the loan which can be used as surety in case the borrower does not pay.Apart from property developers, house owners who are planning to sell a home and buy a new one can do so with bridging finance too. The bank will advance the cash for a lower interest rate than market rate to buy a new home while they wait for the payment from selling their own home. The actual time for the Bridging loans will vary according to the terms set by the bank and the borrower. The same process is also used by stock offering companies and bond dealings. There are many varieties of bridging finance deals in the market but hey can usually be divided into closed and open bridging. Terms of these loans vary only for the closing dates of the loans.Bridging loans are short term loans that are offered to customers for 2 weeks to 3 years. These short terms loans can be extended to companies or individuals. Rates of interest however for these loans will be much higher than the market rate to allow the lender to recover costs. There is also an additional risk to the lender because of the short term of the loan. Most lenders will require a credit check to ensure that you are financially fluid, cross amortization, and they will also set a lower loan to value ratio to protect themselves and their investment. You can close these loans faster but there will be a required payoff after a certain period of time. The most common type of bridging loan is offered by banks to new businesses. These loans will tide over cash flow problems and they can be returned and closed when the problem is solved.For more information please visit ?Glasgow bridging loans? lvk
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Source: http://www.gapagos.com/finance/difference-between-bridging-loans-and-bridging-finance/
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