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Commercial Bridging Loans Maybe the Answer

Sep 9, 2008
In commerce, when situations requiring cash rapidly occurs, looking at commercial bridging loans could be the best answer. Whether it is funds to bridge a deal or money for a property purchase or some urgent business acquisitions, securing a short-term loan may resolve the problem, especially when time is very pressing and you may not wish to use your own capital to fund the exercise.

Commercial bridging loans are short-term mortgages and are used when time is of the prime essence and the conventional means of raising a mortgage could take too long. The loan is secured against a property although occasionally non-property assets may be used as security or collateral. There are two types of commercial bridging loans available; a closed bridging loan, which is normally granted when an exchange has taken place on a property but not the completion, and an open bridging loan, which has no contractual exit in place.

The amount of LTV (Loan to Value) available is normally 80%. However, in some such cases could be possible to obtain a higher LTV (Loan to Value) with a closed bridging loan, as the associated risk connected with this is considered to be reduced. If the purchase price of a property has been negotiated so that it is well below the market value, then potentially, 100% of the LTV (Loan to Value) could be granted. This is because the current market value is used for the calculation rather than the purchasing price.

There is finance out there but how to locate it and secure the best terms could be quite a daunting task, especially if there is a tight time deadline in place. This is when using a commercial mortgage broker to acquire commercial bridging loans on your behalf could be the best solution. They have the knowledge and are normally best placed to source the most suitable deal for your circumstances. Even having no proof of income, a poor credit history or being a relatively new business may not be a problem when obtaining funding.

Having a bridging loan could effectively make you almost a cash buyer, as you are able to complete quicker than someone using a traditional loan is. This may be a very handy tool when negotiating deals. Should the most desirable business premises become available or an excellent business prospect appear? Commercial bridging loans could give you the option of being able to act quickly and secure the ideal commerce opportunity.

The amount of money loaned is generally governed by the value of the asset upon which it is secured. However, the duration of the loan has no such restraints. It could run from as little as a few days to perhaps 12 months or more. As commercial bridging loans are seen as short-term solutions, they are generally more expensive than traditional loans. It could therefore be considered prudent to repay or refinance the deal as quickly as possible. A commercial mortgage broker could insure that there is no redemption penalty associated with this and could help find alternative longer-term business finance.
About the Author
Sean Horton is a Director of Best Commercial Finance, commercial mortgage brokers and IFA specialising in commercial bridging loans and the associated areas of income protection, mortgage protection, mortgage life cover.
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