Learn Everything There Is For You To Know With Regards To Commercial Bridging Loans
Talking about commercial bridging loan, one thing about it that you should be aware of is the fact that it is a form of a finance by which, is commonly used to fund short term deficit in funds, most especially if a person wants to purchase asset while awaiting for the proceeds of the sale of the current asset they have. For those of you out there who may have a hard time understanding the description we stated above, then we will make it simpler for you to decipher. More often than not, there are companies out there who wish to move to a much larger premise to make their business grow and prosper even more, however still foresees some delay in the actual selling of their existing premises. In line with this, what you need to have is a commercial bridging loan because this loan is known for being used in supplying the funds necessary to make the new purchase while the selling of the existing premise is still ongoing. Since we talk about commercial bridging loans, we want you to know that this form of finance actually has two separate types and every single one of them has their own situations to cover.
One of the two types of commercial bridging loan that you should know of is the closed bridge and talking about closed bridge, it is a form of bridging loan that are designed to fund short term capital need to purchase new property, especially when the old property has been placed to a property exchange already. Due to the fact that sales that has gone way beyond the contract stage is known for falling through most of the time, lenders are using closed bridging because of how low risk they can be, thus, they became more willing to supply the required funds very quickly so long as the details of the contract sale is given, alongside the details of the offer that has been made on the new property.
The next type of commercial bridging loan that we want to introduce to you is the open bridge and open bridge is known for being the exact opposite of the closed bridge because of its complexity since this type of bridging loan is known for covering the purchase cost of a new property while the existing property has yet to be sold, or in some instances, has yet to be placed in the market. You can actually say that this is the type of bridging loan where lenders are being keen in providing to borrowers because of how risky it can be and it is often reflected on the increased interest rates they have for it and also, several default penalties too. All in all, the type of commercial bridging loan you will get will depend on the kind of borrower you are.