User:MaryroseBaum780

The many variations and similarities of bridging loans and development finance Due to the market meltdown most lenders have kept tight their loan underwriting which has made it harder for individuals to obtain loans. This has specifically affected people wanting to obtain mortgages as a good credit history is once more essential and larger deposits are required. The tight lending constraints which are impacting many lenders have lead to people failing to get the loans that they require. Some individuals have checked out other options for raising finance instead of putting an end to their plans. On many occasions bridging loans have been an alternative option, although it has to be said not always a wise option. It's very important that you realize that bridging loan deals are only intended as a temporary loan facility so has to be repaid within 6 to 12 months. Bridging finance can often be the lowest priced choice for raising finance over a short period of time, however they generally have a high month-to-month interest rate which makes them uneconomical if used as a longer term loan option. Some other pros of bridging loan funding are that they may be put in place quickly thanks to the more versatile underwriting criteria. It is this plus point that means they are commonly used as a method of finance once applications through other channels have failed! As well as being valuable when funds are needed quickly, bridging lenders will utilize a large variety of property as security. For example derelict property, land and buildings needing renovation. Because of the flexibleness in lending on property needing work or major repairs, bridging finance deals are often used as an easy way to fund building work. But bear in mind there are other financial alternatives than bridging loans which can be used for building projects. With many similarities development loan deals may also be a good solution for funding building, renovation and construction projects. The main benefits that development loans have over bridging is that they can be organized with more lengthy terms, often as much as 3 years, and the funds can be released in stages when it is needed. This has got the main advantage in that interest isn't actually being incurred on money until it is being utilized as the venture starts and expands. The lenders who provide development loans are specialists concerning construction projects so can be very helpful and can arrange finance facilities that will be genuinely beneficial to the project. Concerning bridging finance, once the development has been completed the house or property will be sold and the proceeds used to settle the development loan. Alternatively the completed property can be refinanced to settle the development financing and made available to the rental sector.