Should I get a Bridge LoanWas I supposed to get a bridging loan?
Is bridge credit an costly option?
Bridge credits are known as a useful resource for short-term funds, providing a quick, transient and pure interest rateolution. Everything else - such as when to use one, who would use the bridge, or how it works - is a little less clear. "Isn' the bridge over credit costly? "I don't know most of these bypassing creditors, can I rely on them?
Bridge credits over 12-month periods are non-regulated. Keys to this are a very high degree of responsiveness to repay the loan at any given moment, as well as functions such as roll interest in the loan so that funds flows can be controlled. There is also flexibilty in relation to the type of real estate that can be borrowed.
Due to their short-term character, bridge credits usually have interest ratios that are stated on a quarterly base rather than the yearly interest ratios of a normal mortgages. For example, although a 1% per months installment would be much higher than a 3, 4 or 5% per year installment, the customer essentially pays for the much greater degree of versatility of the products - be it the repayment capability or whether these are the more risky kinds of real estate being loaned.
And what is crucial is that there is usually no prepayment penalty on a bridge. So for example, with a bypassing loan for 100,000 at an interest of 1% for each loan per month, your client would pay 1,000 straight euros on interest repayments against several hundred quid on a straight mortgages.
In addition, the true Beauty of bridging is the capacity to quickly tap into funds until a more lasting resolution is found. So, when you ask: "Are bridge credits costly? Recently a bridge loan was taken out to help our customer add 600,000 to their value. One of our client's properties - an apartment - was rated at £900,000.
As a result of the extension, our customer was again able to visit the High Street financier for a re-mortgage of 620,000 against the new value of £1.5 million. However, it is actually used for day-to-day customers who have a need for fast, short-term funding. In the end, a bridge loan is a means, like any other type of real estate financing, that under the right conditions can be considered the most appropriate option for your customer.
Below are some common applications of bridge loans: Even though brushing finance has been around for several years, the market place is relatively young and some of the brushing financiers are fairly new - so it's not a surprise if you're not used to many of them. Unless you have worked with a bridge creditor, you may not know much about the level of expertise to be expected.
Lots of bridge creditors often sign each case separately and provide tailor-made responses for each client - this is just one example of how much diligence and expense these creditors put in. That is reflected in the sharp increase in GDP bridge loans, which rose from 1.7bn in 2013 to around GBPý5bn in 2017.
Learn more about our activities in the West One Bridging Index. The increased need for bridge credits has led to a strong increase in the number of creditors and available product lines. Certain creditors will deal directly with both individuals and agents, while others will only be available through specialised bridge loan sales organisations.
And if you are still not sure what a bridge loan is, take a look at this brief film.