|
|
|
Bad Credit Mortgage Refinance
Bad Credit Mortgage Refinance
If you are looking to refinance your mortgage but believe you
will be unable to because your credit may be challenged by late
payments, bankruptcy, charge off's, or unpaid medical bills to
name a few, don't...
Organizing Your Finances: - Show Me MY Money: What You're Worth or * net * Worth
Organizing Your Finances: - Show Me MY Money: What You're Worth or * net * Worth by: Janet L. Hall Benjamin Franklin once said, * Time is money *. I think he wanted one to add up how much time they spent on a particular task or job and how much...
Refinance Benefits - Refinancing Could Save You Money
The most common reason most people refinance is to save money, but many people refinance for various other reasons.
1. Refinancing to Lower Your Monthly Payment for an Existing Loan.
You can refinance your existing loan at a lower interest...
Refinance home: distilling cash by renewing home loan
Refinance home is in vogue especially with reduction in interest
rates. Refinance is still going strong with 40% of the home loan
applications being filled in for refinancing home loans.
Homeowners realize that there is enough equity in the home...
Why Talk about Your Finances to Strangers?
Blogging is the latest innovation to take the web by storm.
According to blog tracking firm Technorati, there are currently
20.6 million blogs with thousands more added every day.
According to Blogherald, 30% of internet users (50...
|
|
| |
|
|
|
|
|
|
Bridging Finance Basics
Bridging finance is a short-term loan that is used as a way to provide funding for the purchase of a new property while the borrower awaits the sale of an existing property. Unless all the stars are in perfect alignment, it’s tricky to coordinate the sale of one property and the purchase of another property so that the transactions occur simultaneously.
Bridging finance or a “bridge loan” as it is more commonly referred to, makes such transactions possible. They keep the borrower from ending up in a dire financial situation as can happen when forced to pay two mortgages at the same time. Bridge loans can be used either for business or for personal reasons.
Primarily short term in nature, the process for obtaining a bridge loan is similar to that of most types of loans. Most importantly, it’s advisable to work with a lender that has experience with this type of loan. Also, since the need for a bridge loan often arises with little advance notice, being pre-approved for such a loan is a good idea.
Bridge loans typically are structured as interest only loans meaning that the borrower pays only the interest on the loan each month. The borrower continues with this repayment plan until the property the loan is being used for is sold. When the sale finally does occur, the proceeds of that sale are used to repay the principal. The principal payment typically is in the form of a one-time, lump-sum payment.
The lender does not need to worry too much about default because the borrower is required to put up collateral to secure the loan. This can
be in the form of another piece of property, business machinery or inventory on hand. But rest assured the lender will still thoroughly review the credit history of the applicant, the business and any partners or others with an ownership interest to assess the level of risk it is undertaking.
The interest rate assigned to the bridge loan is based on several factors: the anticipated risk associated with the bridge loan, the prevailing interest rates and a premium added by the lender. Since bridge loans are short-term, generally not longer than two years, the lender has only a short time to make money on the deal. The profit is derived from the interest rate.
Expect to pay a higher rate of interest for a bridge loan. And remember, the monthly payments on a bridge loan generally will be for interest only. Expect to pay off the bridge loan in full, usually as a one time balloon payment, as soon as the property is sold.
In the event that the property is not sold before the bridge loan matures, it can usually be converted to a conventional loan without paying a penalty. But it’s always a good idea to double check this before assuming.
About the Author
Specialists in Commercial Bridging Finance Commercial Lifeline. Independent UK based Commercial Bridging
Finance brokers.
Feel free to reprint and distribute this article as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.
|
|
|
|
|
|