Nowadays, arranging money to buy a property until the existing property is sold is no more an issue. A commercial bridging loan is meant for a provision like this. Actually it is a kind of short term loan which one takes wisely to coordinate the sale of one property and the purchase of another property.
A commercial bridging loan is also termed as commercial bridging finance, as it plays its role between two transactions. This loan can be used either for commercial or for personal concern. In case of this commercial bridging loan, the borrower does not have to bear the burden of two mortgages at the same time.
The process of applying for a commercial bridging loan is hassle free and is just like that of a standard loan. What is greatly advisable is to work with an experienced lender who is already familiar with this type of loan. Sometimes it is too late to take a right move, so there must be an approval for this loan in advance which can put the purchaser of a property in a comfortable zone.
The most potential feature of this Commercial Bridging Loan is that the borrower has to pay only the interest on monthly basis. As far as the principal amount is concerned, its repayment is made when the property for sale is finally disposed off. These proceeds are used as a single payment to pay off the principal amount.
For the lender it is no way a risky affair, as the loan is given only against the collateral the borrower puts up as security. The security is generally in some property. All the same, the lender wants to be assured at all quarters, so the credit report of the borrower is analyzed along with a close review of his/her business or job whatever be. It is done for self-satisfaction in spite of the fact that even poor credit is no issue when something is mortgaged.
As far as the rate of interest on a commercial Bridging Loan is concerned, due to the fact that it is short- term, not more than two years, scope of the profit for the lender depends on the interest rate. The interest rate counts on various things like the existing interest rate, the level of risk and a premium whatsoever be. So there is a chance of considerably high rate of interest. However, if for any reason the property does not sell before the maturity period, make sure it will take the form of a conventional loan and no penalty will be charged.
Netloans Ltd, a leading Secured Loans Broker for UK Homeowners offering a debt consolidation loans service, bridging loans and homeowner loans for any purpose, ensuring that their customers get the best loan deal.