Mortgage and Refinancing Information Channel:

We would like to thank the local libraries, schools, and universities for recommending students to visit us when doing research on any of our information topics.
 Please check back frequently as new topics are added and current topics are updated daily.

Bridging Loan Basics

A Bridging Loan is a short-term loan used as a way to provide funding for the purchase of a new property while the borrower awaits the sale of an existing property. Unless all the stars are in perfect alignment, it's tricky to coordinate the sale of one property and the purchase of another property in such a way that the transactions occur simultaneously.

A Bridging Loan or "Bridging Finance" as it is also commonly known, makes such transactions possible. They keep the borrower from getting stuck in a rough financial corner, which typically means being forced to pay two mortgages at the same time. Bridging Loans can be used either for commercial or personal reasons.

Short term in nature, the application process for a Bridging Loan is similar to that of a standard loan. Most importantly, it's advisable to work with a lender that is experienced with this type of loan. Plus, as the need for a Bridging Loan often arises with little advance notice, being pre-approved for such a loan is a smart move.

Bridging Loans are usually interest only meaning that the borrower pays only the interest on the loan each month. The borrower continues with this repayment plan until the property the loan is being used for is sold. When the sale finally does occur, the proceeds of that sale are used to repay the principal. The principal payment typically is in the form of a one-time, lump-sum payment.

The lender need not be too concerned about default because the borrower is required to put up collateral to secure the loan. This is typically in the form of another piece of property. But rest assured the lender will still thoroughly review the credit history of the applicant, the business and any partners or others with an ownership interest to assess the level of risk it is undertaking. Poor credit however need not be an obstacle.

The interest rate on a Bridging Loan is based on several key factors: the potential risk associated with the loan, the current interest rates and a premium added by the lender. As Bridging Loans are short-term, generally not longer than two years, and in most cases only a metter of months, the lender has only a short time to make a profit on the deal. The profit is derived from the interest rate.

Expect to pay a higher rate of interest for a Bridging Loan. And remember, the monthly payments are generally interest only. You should also expect to pay off the Bridging Loan in full, usually as a one time payment, as soon as the property is sold.

In the off chance that the property is not sold before the Bridging Loan matures, it can usually be converted to a conventional loan without a payment penalty. But as ever you should not assume this is the case and be sure to check with your lender that this is an option if circumstances call for it.

About the Author
Need a Bridging Loan Fast? Commercial Lifeline, Commercial Bridging Loan and Commercial Mortgage specialists can help.

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 link above is intact.

MORE RESOURCES

used office furnishings-supplies-equipment-desks-cubicles-service-counters for sale in Akron Ohio   Die cast model cars for sale in Akron Ohio  
used cars for sale in Akron Ohio   unfurnished homes for rent in Akron Ohio

RELATED MORTGAGE AND REFINANCING ARTICLES: Refinance Mortgage Loan - Tips on Refinancing Your Home Mortgage Refinancing your home mortgage can come with some great perks. If you do it with no money out of pocket, you can skip one to three mortgage payments. Securing the Best International Mortgage for Your Home in Spain Are you one of a growing number of people planning on buying a holiday home in Spain? Or have you decided to expatriate, buy a Spanish home and live in it permanently? If so, you may be about to begin your hunt for an international mortgage to purchase real estate abroad? The task of finding the best international mortgage can seem like quite a daunting one at first glance with many domestic, overseas and international providers vying for your business. But don't panic! Tackle the task head on, ensure you secure yourself the best possible international mortgage or property finance deal today and you will save yourself tens of thousands in interest payments over the lifetime of your mortgage. Refinance Your Property Online By refinancing your property online you can take advantage of competitive rates in the convenience of your home. You should consider refinancing your property if interest rates are lower, your financial situation has improved, or your credit rating has improved. Home Equity Loans - Research Your Lender Carefully Real estate prices are rising across the country, and Americans are tapping into their home equity like never before. Americans took out $431 billion in home equity loans in 2004, and that amount may increase in 2005. Home Buying - What Can You Afford? Okay, you've decided to buy a home and are trying to figure out what you can afford. Before you go home buying, you need to carefully consider what you can afford as far as a mortgage payment. Buying a House or a Home? A house is just that, a house, until someone lives in it. That's when it becomes a Home. Choosing The Right Mortgage For You This article will help you understand the differences between a variety of mortgage options. There are many different mortgage products offered by the various lending institutions in Canada, so you may not know what features to look for. Getting The Best Rates On Mortgages And Loans With an impending up-grade to the family due in a few months it soon became clear that our two-bedroom home would need an addition. We loved our house too much to consider moving. What is an Interest Only Mortgage? An Interest Only Mortgage is one where the repayments are made up entirely of the interest on the loan. When the mortgage term is complete, the capital originally borrowed is still outstanding. Alternative Options For Rising Interest Rates As interest rates have risen in the last six weeks from record lows, homeowners are once again face with finding viable options to reduce the amount of interest paid on their home loans. The rush to refinance provided borrowers with good to excellent credit the opportunity to take advantage of low interest rates, that helped to reduce their monthly mortgage payments, which was the only benefit provided by the lowered rates. Basic Tips for First Time Home Buyers The first time you purchase a home is an exciting experience. You are anxious to call the place yours and maybe a little worried about how the whole thing will play out. Lesser Known Facts About Home Equity Loans Refinancing your debt via a home equity loan shifts your debts loan to your home. The flip side to such a move is that your home is on the line. Home Equity Lines of Credit - the Basics A Home equity line of credit is a loan which is similar to a credit card. These often have a very low interest rate (In most cases even lower than home equity loans). Mortgages After Bankruptcy: Easier Than You Would Expect Give yourself time to rebound. Whether you had to turn to bankruptcy because of a divorce, a medical emergency, a job loss, or a problem spending habit, give yourself a little time for the air to clear before house hunting. Cash Out Refinance Mortgage Loans - Home Equity, 2nd Mortgage or Cash Out Refinance Loan There are some definite benefits to doing a cash out refinance. Just make sure that overall you are not going to be spending more money in fees and interest doing a cash out refinance as opposed to a home equity loan. Home Loans For People With Poor Credit - Understanding The Requirements For a Subprime Mortgage Home loans for people with poor credit demand that you understand the requirements for a subprime mortgage loan to get the best rates and terms. By satisfying the requirements, you can be assured of securing a subprime mortgage to buy a home. Home Mortgages: Does It Ever Make Sense to Pay Points? Interest rates on home mortgages are often quoted with and without points. A point equals one percent of the amount you are financing. Jumbo Mortgage Loans - Getting Approved for a Jumbo Mortgage Loan Online Getting approved for a jumbo mortgage loan online is similar to getting approved for a traditional mortgage when you use a mortgage broker. However, you can expect to find lower interest rates online with better terms. Avoiding Foreclosure If you fall behind in your mortgage payments, you face the threat of foreclosure. Foreclosure means your lender can take over your home, and you must move out. Home Mortgage Loan Pre-Approval Online - Keys When Applying For A Mortgage Online Applying online for a mortgage is very fast and easy. Just make sure of a few things before you start to look for places to apply to.

HOME | SITE MAP © 2012 - 2024 All Rights Reserved Increase pagerank with HitsSurfer