Understanding Bridging Loan And its Priority

Bridging Finance is referred as bridge loans.  And it has nothing to do with the construction work of any bridge. It is simply a way to minimize the economical problem between two transactions. Generally these are short term loan and carries high interest rate. These are easily available and neither these requires any credit record. Off-course there are some preliminary conditions like you need to be of 18 years age, should have a regular source of income and something worthy that can be kept as security.

These loans are used to supply cash mainly for sectors like real estate. The borrower can seek help from the lenders until the permanent financing is not arranged. Hope the word bridge is now clear, it is just to overcome temporary obstacle.

Uses of Bridging Finance

A distinctive use for a bridge loan comes when there is a gap of sale and purchase between two real estate properties. For example, consider a company who want to shift to new office building before closing the old one, from where the money will come. The company will proceed towards the financer who will provide them the bridging loan. The money of the loan will be paid when the old office is sold. This mode of financial help allows having two properties at a time.

Bridging Finance always requires that you vow collateral as security. This is done against the financial help you get from the lender and somewhat it is important too because lenders need a sense of security for the money he is spending. However, if you have outstanding business good record of personal credit, wonderful relationship with the lender, you will be able to get the cash with just a signature.

The need of bridging finance often arises suddenly and that too without warning, it is always suggested that one should have good relationship with the lender. This will help you get pre approved loans. The time span of these loans lies between 14 days to 2 years depending upon the amount of the money. The terms of the bridge loan can be negotiated too. 

Interest Rate Applicable for Bridging Loans

Bridging Loans lasts for a short period of time (as compared to other loans). This is the reason why these loans have higher interest rate. Higher rates are the only source of profit for the lenders. Secondly shorter the period of loans more is the interest rate; generally it varies from .05%. There are mainly four factors which decide the loan and its interest rate in general.

·               Length of the loan (Time Period)

·               The risk involved in the loan,

·               Your credit history

·               The liquidity and collateral for the amount 

Tips to get Best Bet

You are looking for the bridging loan at best possible rates. The only way to crack the answer is to search for the financing company who can offer you the sum at most affordable rates. Search on the internet fill the online form and ask for the quote. Choose the one which suits your need.