08 Jan A Guide for Bridging Development Finance
1. What is Bridging Development Finance
Bridging finance is a short term loan (12 months or less) which is use by home buyers, landlords, home builders, property developers and investor for both residential and commercial properties if they want building or buy a property they can easily use short term loan option which is Bridging Finance.
If business man needs to uplift the capital or wants to meet a business devoir or any settlement such as tax liabilities so this also a good funding option for businesses because it can help in your emergency situation of your business
It is fast, flexible and secured way where borrowers get quick cash or loan in limited time.
A bridging loan is a suitable way to debt money for short periods of time. In this Loan loans are usually for periods of a year or less.
2.How Many types of Bridging Finance?
There are two types of bridging finance are:-
- Closed Bridge Finance
- Open Bridge Finance
Closed Bridge Finance
In Close bridge finance, before take any loan, borrower has to predefine set of date when the loan will be pay back. To take a closed loan, you will need proof of how you will pay back and act to a fixed time period or date when you will repay the full loan. It is generally offers lower interest rates as compare to open bridging loan because this is also known as the ‘exit strategy’.
Open bridging Finance
The open bridging loan can be required when the borrower needs to settle down dealings in less time period or not definitive date at the dawn.
It is use when the borrower does not have a clear exit strategy
3. Where it is Use?
It is use for both residential and commercial property transactions. Both closed and open bridging finance are used for a variety of reasons, including buy-to-let, property investment and development.
Generally bridging finance is used to:
- To secure a property or land until waiting for present property or land to sell.
- Quickly secure a property in a sold out.
- Continue to buy even if the buying-chain unseat.
- Property and assets developments and refurbishments needed prior to obtaining a mortgage
4. How it works?
The difference between a bridging or regular finance is the regular loan takes a time to arrange a fund for borrower sometimes its process can take one month or more than one month but in bridging finance it can be ready in very short of the time such as 24 hours.
5. What is the Process of bridging finance?
This process generally takes between 7 to 28 days and sometimes, this can be taking a less time or just in a few hours, depending on the case, and the set of situation involved
When you using bridging finance, you can need the following:
- Borrower has to provide complete summary of the deal and do clear reasons for why they wanting a bridging loan and also have to clear about security and repayment strategy to lender.
- When Lender receives all documents (if applicable) of the new land or property buying and evidence of the price to be paid
- Then Lender issues an offer letter which describe the terms of the proposed finance & what is required to be done to receive that finance
- After that lender explain an estimator to provide an evaluation report and send all the documents to your advocate.
- Your advocate explains all the terms and conditions of the finance
- After Reading all terms and conditions on the documents borrower sign all documentation
- Required Funds are released to the advocate for legal completion
- The bridging loan money is sent to the borrower.