| When you buy a house, it is likely that
you will be able to borrow a large part of the cost from a building society,
when the solicitors close the deal. It is usual, however, to put down a deposit
of 10% of the cost several weeks earlier when the price is agreed. Banks will
often help with bridging loans for this purpose, against the solicitor' s
undertaking to repay them on completion of the deal. In the same way banks will often make bridging loans to investors, against the security of their investments, when money is required to pay for the purchase of shares before it is available from the sale of other shares. Banks are not usually keen on making long-term loans in either case, because they prefer not to tie up their resources. They lend money which they have borrowed from depositors, mostly repayable on demand or at short notice, and one of the classic ways for a bank to get into trouble is by borrowing "short" and lending "long". |