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The many differences and parallels of bridging loans and development loans Since the market meltdown most lenders have kept tight their loan underwriting which has made it more tricky for people to obtain loans. This has particularly affected people attempting to obtain mortgages in that a favorable credit history is once more essential and bigger deposits are needed. The tighter lending demands that are impacting many financiers have resulted in people failing to obtain the finance that they need. Some individuals have investigated other available choices for raising finance rather than stopping their plans. On many occasions bridging loan deals have been another option, though it has to be stated not always a wise option. It's very important to be aware that bridging finance options are just intended as a short-term loan facility so because of this must be repaid within 6 to 12 months. Bridging finance can be the least expensive choice for raising finance over a short time period, however they generally have a high month-to-month interest rate causing them to be uneconomic if used as a longer term loan facility. Additional pluses of bridging loans are that they can be put in place swiftly because of the more versatile underwriting criteria. It is this plus point that makes them well liked as a method of finance once requests through alternative sources have failed! Besides being convenient when cash is required in a hurry, bridging lenders will utilize a large variety of property as security. This can include derelict property, land and buildings in need of restoration. Due to the flexibility in lending on property in need of work or significant repairs, bridging loans are commonly used as a method to fund building projects. On the other hand there are other finance possibilities than bridging finance that may be used for building projects. With many parallels development loans are also a useful option for resourcing building, restoration and construction work. The main benefits that a development loan will have over bridging is they can be organized with longer terms, often as much as three years, and the funds can be released in stages as it is required. This has the main advantage in that interest is not being charged on money until it is being used as the project starts and grows. The lenders who provide development loans are experts with regards to construction work so can prove to be very helpful and can structure finance facilities which will be truly helpful to the project. As for bridging finance, once the development is over the house or property will be sold and the income used to pay back the development finance. On the other hand the finished property can be refinanced to pay back the development funding and offered to the rental marketplace.