What Are Bridging Loans And How It’s Useful?

Tuesday, May 21, 2013, AM | 2 Comments

Bridging loans are always secured short-term loans. The most popular security given in order to acquire these loans are residential property and commercial property.

It is the ultimate option for removing the gap between property transactions. It is a strategy of securing a property simultaneously with selling another property.

It’s typically like down payments in which the business owners sell their assets in order to pay additional expenses.

  • The procedure of acquiring the loan

    The organization and financial institutions which issue the bridging loans initially analyze the properties of the people. They do not really pay attention towards the debt and income ratio of those people. It thus allows them to acquire loans much easily. They can ably pay additional expenses of relocation.

  • Types of bridging loans

    One can also find lenders over the web. They offer two types of bridging loans.

    1. Open loans– it will be given to people who have already sold their current properties and are waiting to get the payments.

    2. Close loans– it will be given to people who do not have any buyer till date. The property is not sure to be sold and there is a possibility that one is unable to return the loan. They are much higher in costs as compared to the open loans as the organizations have to bear higher risks in allotting them.

  • Uses of the bridging loans

    The major use of bridging loans is when a person plans to purchase a new property. The current property is yet to be sold and the new one has to be purchased. One just cannot wait until the property one owns to be sold and then purchase the other property.

    The opportunity might be snapped by some other person in the meantime. Thus one needs a loan to bridge a gap between the two deals. They last from a week till two years depending on the company which is allotting the loan.

  • Benefits of bridging loans

    Moving from one place is stressful no matter what happens. Financial gap adds to the difficulty all the more. Thus these loans can make the procedure of moving less painful and straining. It can calm one`s mind and wallet by overtaking the expenses and worries that one had to bear otherwise. All one needs to do is to just visit organizations which lend bridging loans. The loan is gaining much popularity in foreign countries as well.

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  1. 2 Responses to “What Are Bridging Loans And How It’s Useful?”

  2. By toptermpapers on May 21, 2013, 4:17 am | Reply

    Very interesting! Thanks for post.

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