Bridging loans are a type of short-term loans. They are also called swing loan. In general, bridging loans are for a maximum period of 3 years or more in the expected long-term funds. The UN target is able to cover only for the transition to a more permanent financing can be arranged. Once the new financing obtained, the money will be used for the bridging loan.
Bridge loans have higher interest rates than conventional loans. Notuncommon for lenders to require cross-collateralization, in addition to the appointment of a loan at a low ratio of value to reduce their risks. However, bridging loans can be set up quickly and does not require a large stack of paper.
Bridge loans are also used in the purchase of real estate to fast on the property in the vicinity, taking advantage of a short-term or call a property in foreclosure. If the property is sold or refinanced, the loan is generallyreimbursed.
Bridge loans are similar to the lending of money is difficult for the two non-traditional and unusual circumstances or emergencies will be achieved. The main difference is that the money is hard to refer to the source, if an individual, company or private investment company. Bridging the points to the life of the loan to borrow.
The interest rate on a bridging loan is usually 12-15% for a maximum of 3 years. For commercial property, the loan-to-benefit ratio is notmaximum of 65% and 80% for residential properties. Loans may be granted more than open or closed for a refund.
Banks generally do not offer bridging loans property because of the high risks and lack of documentation is not the credit criteria of the sector. A bank would have difficulty justifying its lending practices, government regulators and investors when it has issued its interim loan. Therefore, most bridge loans from individuals, corporations and investment are generatedPools.
Bridge loans are used in corporate finance and venture capital as well. You can inject small amounts of money to lead a company through equity financing in a row, large groups. In addition, they can help a company in difficulty in finding a buyer or several investors. If a company is sold, a bridging loan of debt before it becomes final for the public.
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