Use Short term Bridging Loan to bridge the cash gap
One day on my way to the office, I noticed something. No, it was
not a gorgeous dress or expensive jewellery. But, a house, it
was beautiful. At the very first glimpse, I decided to buy it at
any cost. Now, I feel proud to live in that house. Thanks to
"Bridging Loan", it is only due to it my dream to own that house
could see light of the day, which could have been impossible
with little savings in my account.
Bridging loan is a short-term loan offered by commercial lenders
to borrow for a specific purpose such as for critical and
immediate purchase of a property, pending arrangement of a
long-term mortgage. Bridging loans are also known as "interim
financing", "gap financing or a "swing loan".
Short Term Bridging Loan are commonly used to
"bridge the cash gap" when completing commercial real estate
transactions. As there can often be a time lag between the sale
of one property and the purchase of another, a bridge loan
allows a homeowner more flexibility.
A borrower can be an individual or corporations and can be
customized for many different situations. The purpose of
borrowing could be to purchase a land, residential or commercial
property. Bridging loan can also be used in case of auction
where a borrower can have a bridging facility so that a bid on a
property can be done with confidence.
A borrower will be asked to secure the loan with some kind of
significant collateral. Heavy machinery, business equipment,
inventory, other commercial or residential properties owned by
the borrower and even properties involved in the purchasing
process can be put as a collateral against the loan.
Bridging loan can be classified into open and closed bridging
loan. Open bridging loan is available to a borrower who goes
ahead with the plan to buy a new house without finalising the
terms of sale of the existing house. Closed bridging loan is
available to borrowers who have agreed on the terms of the home
he is buying and selling, but there is delay in moving from the
old to the new house.
Lenders usually allow bridging loans of up to 65% of the value
of the property kept as a collateral against the loan. A
standard bridging loan would range anywhere between