What
is bridge finance:-
Bridging
finance might be thought of as a short term
loan or mortgage.
A typical example of where it might potentially
be used is during the process of buying a house
where if you needed to extend the loan longer
than anticipated bridging finance would solve
the problem, this can happen when their is a
break in the chain of vendors and purchasers
when more time is required.
So
if you for example want to buy a new house before
your home is sold but do not want to risk the
new property being lost in the time lag then
bridging lending makes sense but beware it can
be expensive.
Bridging
finance is divided into two types open and closed
bridging. Open bridging finance is when the
date of purchase is not known to all concerned
as opposed to a known completion date of closed
bridging.
Care
must be taken with bridging finance it is secured
finance on a property so default and arrears
can result in repossession.
Your
bridging finance could be placed on your existing
property, the new home , or even both.
Bridging
lending is normally a lower loan to value than
a standard mortgage say only 65% maximum and
there would be a property valuation required
and possibly exist fees. Interest is often charged
at 1% or more of the advance per month and rolled
up at the end. Asking for more time to extend
the term can incur charges and there may be
administration costs. Please note that the amount
that would be available
to borrow would be dependent on a suitable valuation
on the property / properties. Also note that
in the instance of a second charge loan that
the amount of
the existing mortgage may have to be deducted
from the amount of the proposed bridging loan.
big
bridging loan
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