User:BrunerDesrosiers874

Differences and similarities of bridging finance and development loans Due to the market meltdown most financial institutions have kept tight their finance underwriting which has made it more tricky for individuals to get loans. This has particularly affected people looking to obtain mortgages in that a good credit history is once again essential and bigger deposits are needed. The tighter lending limits that are impacting most lenders have led to people failing to get the loans that they might need. Some people have looked at other available choices for raising finance rather than putting an end to their plans. On many occasions bridging loan deals have been an alternative option, although it has to be stated not necessarily a wise alternative. It is very important that you realize that bridging loan deals are just meant as a short-term loan facility so has to be repaid in 6 to 12 months. Bridging finance can often be the cheapest option for raising finance over a short period of time, however they normally have a high monthly interest rate making them uneconomical if used as a longer term loan option. The additional features of bridging loan funding are that they may be put in place swiftly as a result of the more flexible underwriting requirements. It is this advantage that means they are well liked as a method of finance once approaches through other sources have failed! Together with being convenient when money is needed in a hurry, bridging lenders will make use of a large range of property as security. For example derelict property, land and buildings needing renovation. Due to the flexibility in lending on property in need of work or significant repairs, bridging loans are often used as a way to finance building projects. Even so there are other finance solutions than bridging loans that may be taken advantage of for building projects. With many similarities development loans may also be a useful alternative for funding building, renovation and construction works. The particular advantages that development finance deals have over bridging is they can be established with much longer terms, often as much as 3 years, and the funds can be released in stages when it is required. This has the primary advantage in that interest is not being charged on money until it is being utilized as the venture begins and expands. The lenders who provide development loans are experts when it comes to construction work so can prove to be very helpful and can structure finance facilities which will be genuinely helpful to the venture. In terms of bridging finance, when the development is over the property will be sold and the income used to settle the development funding. On the other hand the finished property can be refinanced to settle the development financing and made available to the renting market.