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This
a short sample article relating to UK Bridging Finance.
You can download the full guide to Bridging Finance, Commercial Mortgages
or Buy to Let Mortgages by visiting our Commercial
Mortgage Guide page.
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UK Bridging
Finance
Bridging Finance, also commonly known as as 'bridging
loans' and 'bridge
loans', have nothing at all to do with re-building
London Bridge. Bridging Finance is basically a short-term
loan that a business uses to provide cash for a property
transaction until permanent financing can be arranged. The
word 'bridge' indicates the fact that the loan
is designed to get you over a temporary obstacle.
The most common use for a bridge loan is to cover situations
such as when a company needs to complete on a new office building
before having sold their old one. A situation were cash flow
may be a problem. They would use the funds provided by a
bridge loan to keep up payments on the old building until it
is sold.
Bridging Finance almost always
requires that you pledge collateral as security
against the loan. Generally this involves commercial or private
property that you own, or are in the process of purchasing.
If you have good business and personal credit, as well
as an outstanding relationship with your lender, you may
be able to secure your bridge loans on just a signature.
Because the need for bridging finance sometimes arises suddenly
and without warning, it is a good idea to establish a relationship
with a lender before the actual need arises. When you do this
you can arrange to be pre-approved for a specified loan limit.
Later, when the need suddenly arises, you won't have to wade
through all of the red tape. The typical term for a bridge
loan runs from a fortnight to as long as two years. Of course,
any terms can be negotiated and a motivated lender will work
hard to match your needs.
Since bridging finance usually lasts for a relatively short
period you may find that the interest rate you are being asked
to pay is slightly higher than a more conventional type of
loan. Lenders make their profit by charging interest across
the life of the loan. The shorter the loan period the less
interest they earn. As a result many lenders will often boost
the rate by a 1/2 point or more. In general, the length of
the loan, the amount of risk that is present for the lender,
the quality of your credit history and the liquidity and value
of your collateral all are used to help determine the interest
rate.
By far your best option for securing a bridge loan at the most
favourable rate and terms is to work with a qualified UK Commercial
Mortgage Broker who understands the process aquiring a bridge
loan. In this way you can get your application in front of
as many lenders as possible, compare them and finish up with
several who are willing to compete for your business.
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Commercial Lifeline are Commercial
Mortgage and Bridging
Finance specialists.
You can download our free guides to Commercial
Mortgages, Bridging Finance
or Buy to Let Mortgages by visiting our Commercial
Mortgage Guide page.
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.
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