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Aus Wikipedia zur Industriegeschichte Dorsten
The differences and parallels of bridging loans and development loans
Since the market meltdown most loan providers have tightened their loan underwriting which made it harder for individuals to obtain finance. This has particularly affected people wanting to obtain mortgages in that a good credit history is once more a must have and bigger deposits are required.
The tight lending limitations that are influencing many lenders have led to people failing to obtain the finance that they might need. Some people have looked at other available choices for raising finance instead of putting an end to their plans. On many occasions bridging loan deals have been another option, although it has to be stated not necessarily a wise choice.
It's very important to keep in mind that bridging loan deals are just intended as a short term loan facility and therefore must be repaid within 6 to 12 months. A bridging loan can be the lowest priced option for raising finance over a short period of time, but they usually have a high month-to-month interest charge leading them to uneconomic if used as a long term loan option.
Some other features of bridging loan funding are that they can be put in place quickly as a result of the more versatile underwriting requirements. It is this benefit that means they are favored as a method of finance once applications through alternative channels have failed! On top of being valuable when money is needed quickly, bridging lenders will make use of a large range of property as security. For example derelict property, land and buildings needing repair. Because of the flexibility in lending on property requiring work or major repairs, bridging loans are often used as an effective way to fund building projects.
About the other hand there are other finance possibilities than bridging loans that may be used for building projects. With many similarities development loan deals can also be a good alternative for funding building, restoration and construction works. The main advantages that development loans have over bridging is they can be organized with much longer terms, often up to three years, and the money can be released in phases as it is needed. This has got the primary advantage in that interest is not being charged on money until it is being used as the project begins and expands.
The lenders who provide development finance are experts concerning construction work so can be very helpful and can structure finance facilities which will be genuinely beneficial to the project.
As for bridging finance, when the development is over the property or house will be sold and the revenues used to repay the development funding. Alternatively the completed property can be refinanced to settle the development financing and offered to the rental market.
