Post about "finance"

When and Why Do We Need Bridging Loans?

More often than not we find ourselves in a situation that requires immediate funding. The requirement may be due to a business deal, a capitation required for a business or a real estate transaction. We might have the capacity to face these kinds of situations but we might not be able to get the funding as immediately as the situation demands. This is where the bridging loans come into picture. The concept of this loan is to take care of the financial requirements of a person who is in need of some immediate funding. Once a person receives a bridging loan, it is processed within one or two days, unlike any other loan. This is one of the reasons why people often like to avail this kind of loan, even though it demands for a higher rate of interest.Having given a brief introduction to what the bridging loans are, it is time to take a look at the different ways in which a person could secure a loan. A person who owns a house or a property would be eligible for this loan. At the time of availing a loan, there should not be any debts on the property, which is used to avail the loan. The terms and conditions of a bridging loan, demands that any person could secure a loan for a sum of amount that comprises 75% of the property’s current market value. The money that is assured by this loan can be used in any way in which the customer wants to use it. This is a short-term loan that can be availed for a period of 2 days to 12 months, within which the loan has to be closed by the person who has availed it.Apart from the residential loans, people can also avail commercial bridging loans. Commercial loans can be secured on any kind of commercial property that a person holds. Properties that have been leased for a long term, is a good example of a commercial property. But the terms of the lending organization, varies with the type of property that is being used to avail a loan. For a commercial property, a person would be able to secure a loan for 60% of the property’s current market value. The money received from these loans can be used for business transactions and professional deals.Though the bridging loans could help a person, meet his immediate financial demands, it is important for any person to research a little before going for such loans. It is good to gain some knowledge about the best lenders available in the market, whose terms will best suit our demands.But why do the organizations want to give a loan of this kind? And how do they benefit from this? Since it offers immediate money, the interest rates for these loans are higher than any other loans. The organizations would offer bridging loans, only when they are satisfied that the person availing the loan, has the ability to repay the amount. So the organizations do not have anything to lose from their side. These loans would be of great help to those people who are involved in a large business, since they would often find themselves in critical financial situations.