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All About Bridge Loans

What is a "bridge loan?" Certainly, it isif the property market conditions are good,
not a loan for buying a bridge. It gets itsyou can get out from under a bridging loan
name from a frequently used type of financialquickly. . However, you must realize that a
strategy. Properly used, it can be a decidedbridge loan has serious risks. It is still
help in achieving financial goals.something that will need to make sense for
Improperly used, it can be a financialyour  business.
disaster.
If you feel taking on this type of loan is
By definition, a "bridge loan" is athe right thing to do, you will be far better
short-term loan used to purchase commercialoff going through a specialist commercial
property. This is something that can come inlender. This lending institution will shorten
very handy, depending on the particularthe entire process. A lending specialist
situation. There are two main points that youwill know the market and he/she can quickly
need to consider before you opt for a bridgemake a judgment on the best loan for you,
loan. One is your needs and the other is thebased on your particular circumstances. It
state  of  the  property  market.would do you no good at all if you have
worked out a bridge loan package only to find
One of the major benefits of bridge loans isout the loan underwriters have rejected the
that it will allow you to purchase a newapplication.
property before you have sold your existing
one. You will need to evaluate your currentBe sure to check that the loan can be
situation to determine if your needs justifyconverted into a conventional commercial
taking on this type of finance. Some majorfinance package. You will also want to check
questions you must field in your evaluationon the type of interest rate and the costs
are:you  will  entail  if you do have to convert.
Will you lose the new property if you can'tMost commercial lenders will be willing to
offer  a  deposit?extend the terms of your bridging finance
package. If you have a buyer and you are
Would you be eligible for a discount on thewaiting for the sale to close, a bridge loan
purchase price if you can come up with theis much more flexible and accommodating than
cash  fast?you  might  expect.
What are the existing market conditions inRepaying your bridge loan at the end of the
regard to the sale of your existing property?loan term more often than not depends on your
ability to sell your existing property. If
Would it be possible to sell your existingyour property does not sell in the required
property in the time frame set out in yourtime frame, you will be paying the existing
finance  package?loan on your current property, your new
property and the newly converted bridge loan
Most bridge loans typically run for one yearas  well.
and will need to be paid in full at the end
of the term unless it is possible to convertIf you believe this may be a possibility, be
it into a commercial loan. Also, interestsure to take a package that can be converted
rates will be higher on a bridging financeto a commercial loan if the need arises.
package.Otherwise, you may have to come up with the
full loan sum at the end of the finance term.
If you do not have an urgent need for the newAs I cited earlier, bridge loans can be a
property and the market is slow, it may notdecided help for your business, but there are
be in the best interest of your business torisks. Let the borrower beware !
take on this type of loan. On the other hand



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