Bridging loans 'thrive under economic duress'
Thursday February 21st 2008
"The need for bridging finance can rise during times of financial duress," financial experts have claimed.Financial information provider Business Moneyfacts claimed that bridging loans were crucial when it came to auction purchase of residential property, allowing lenders to move deals on quicker than would otherwise be possible.
The group explained that investors purchasing a property at auction often look to bridging loans in order to complete deals in a matter of weeks – providing a valuable recourse when conventional mortgages are not applicable.
Lee Tillcock, editor of Business Moneyfacts said: "Repossessions are already increasing and the subsequent increasing number of lots can only serve to benefit property professionals looking for to acquire property quickly at competitive prices.
"In an environment where credit is harder to secure, bridging finance can perform an ever more important role, providing short-term solutions while that ever-more-elusive long-term mortgage is finalised."
'Closed' bridge and 'open' bridge interim financing often involves higher than usual interest rates, but allows new house purchases to proceed before an existing home is sold off.