What is the idea behind this concept?
The best bridging finance, or bridging finance loans, occurs when an individual business owner needs money between the sale of one asset and the purchase of another. In a perfect world, we would rather live debt free and we also would like one property to sell exactly at the same time we are buying another. This does not always happen because it is not a perfect world and here where the idea of looking for bridging finance company has to appear.
Bridging finance lender is a company or a person who is welling to offer you an asset-based financing that is lent in a very short term at a higher interest rate. In this case, also known as secured loan, the lender will charge a much higher interest, regardless of credit, because they need to make the deal worthwhile for their business. Six months is the usual amount of time for the average lender.
What would be the ideal strategy to adopt in this case?
Some money saving ideas can still be applied to these situations. You could pay the debt off earlier than the time allotted. And even though the money is meant for the purchase of the next asset, you can use it if you need to pay something else off that is either overdue or set at a high interest rate.
What is the #1 benefit of this concept?
It is usually mentioned in any contract that the starting date to pay back the money is the date when you finally sold the asset. It is always better to make the best use of this benefit and do not hurry to pay back unless you are sure that you can do it free of problems.
However; you may find the home that you have always wanted and searching for companies with moderate bridging finance rates may be the only answer to your situation.
What if it did not work out as we described?
One of the tips for saving money is to never borrow more than what you know that you pay back. You do not want to exceed the amount of time set by the loan. In this case, I would advise you to look for other avenues to solve the problem.
It is a wise idea to be very careful as for the offered high interest rates; it can be very hard to afford it. This would unfortunately lead to loosing huge credit points and it will be really difficult to get any business loans.
What is my last tip for you?
A few finance tips for young people is to make sure that you go to several lenders instead of just settling for the first one that approves your commercial loan. It may be tempting to just go with the first company but you should always check to see if the competition is offering a better deal at a lower interest rate.
