Only he can judge what is incurred in the present, individual project financing needs. Interim are subject to market conditions and are often flexible in the interest rate as opposed to agreed, long-term real estate financing. In the case of a long-running financing can occur so to unplanned over-expenditure of interest. Are another reason to keep as short and concise as possible interim, as compared to the regular”real estate financing generally worse conditions. Although this also depends on the creditworthiness of the borrower, they represent an increased risk for the Bank in each case, which is reflected in poorer the borrower interest rates.
Nevertheless, the financing must be sufficient so that the expiration of the overall project is not jeopardised a narrow ridge, to assess it is! Calculation example a Interim financing to better understand to serve an example calculation: suppose a newly built real estate costs 200,000 euro. The lender pays only after the completion of the construction phase I (E.g. construction of the exterior walls) from the first part sum of 50,000 euros. Up to this point, the client already in about 35,000 euros must advance. This means that a financing is necessary to end the construction of phase I 35,000 minus any existing equity.
Only after 12 months, the borrower has sufficient capital and has, for example, only 10,000 euros, at the present time he has to decide between funded 25,000 euros or prefer 1 year waits until he needs no more financing. For the use of the financing is to assume a loss of interest in height of the conditions of the interim financing PLUS lost credit interest for existing equity. This should be very accurately calculated and checked. Alternative capital raising by a policy loan is there still more Ways to meet short-term capital needs: an example is the policy loan. This is de facto the loan of an existing life insurance. The insurance company pays an amount to the policyholder prior to the maturity of the trace output for the later trace performance decreases or the policyholder pays the sum later. Usually, a policy loan is low-interest as E.g. planning or instalment loan, because it in principle but not to perform advance anyway acquired payout claims is a (riskier) loan business. Whether this variant’s worth depends on the individual situation of the real estate prospects this should basically a professional advice be obtained. Conclusion a bridge financing may be necessary for different reasons. Always these should be considered realistic and detailed that it must fit the individual situation and should be as cheap and low risk be. Valuable assistance This can be found on the Internet at. More information policy loan financing