Are you worried about a delay accessing a property loan or even your existing bad credit score rating? Don’t worry, bridging finance and loans is just the thing you need.
Studies in the UK have however shown 50 percent of people are unaware of bridging loans as a means to buy a home.Since 2007 only 13 percent of people have used a bridging finance loan option.
What is a bridging loan? Bridging loans are facilities businesses or individuals take to cover an interim period till a medium or long term loan substitutes it. In the UK, bridging loans are also called caveat loans and are strictly short term loans usually within a 12 month duration period.
Bridging loans are sought for a specific problem or to quickly undertake a property project (like prevent a property foreclosure) Bridging loans are ideal for property investment because of quick financing provided.
Repayment can happen with a flip strategy when another structure is sold off quickly to pay off the bridge loan. Or alternatively repayment can happen after the property is sold or even refinanced with a traditional lender.
Property buyers should have adequate information on bridging loans for quick property purchase and smart re-payment options.
There are two types of short term loans:
Open loans: these loans offer greater repayment flexibility. Open loans is used when a buyer is still trying to get details on property payment closure.
Closed loans: these loans offer a fixed repayment closing date when signing up.
Here are 6 reasons why you should consider a bridging loan:
Speed of accessibility: this loan provides quick access funding unlike other loans being offered. Time is of the essence in closing out property deals. The difference between a bridging loan and a regular loan is the time duration on accessible funding. Regular loans take months while bridging loans take 24 hours. When a small sales window presents itself, bridging loans come speedily to the rescue after a property portfolio has been determined.
Flexibility: getting a bridging loan would not depend on your credit history and income. Lenders that operate bridging loans secure it with the property. Sale of the property provides the exit strategy in paying back the loan usually within a 12 month time period.
Property development: property developers find bridging loans as great support for an entire project. It allows for accessibility in stages throughout the renovation project. Bridging loans are used to purchase any kind of property ranging from apartments, commercial units, land or shops.
Planning permission: bridging loans can be accessed without an initial planning permission. A planning permission can be applied for after the property has been purchased. The property can then be sold at a profit.
Uninhabitable properties: bridging loans can be accessedwith the high risk associated with uninhabitable properties. People who want renovation on existing uninhabitable structures (like no running water or kitchens) see potential for selling after the restructure. Bridging loans provide covering costs on renovations and repairs on uninhabitable properties.
Auction purchase: auctions provide an avenue to make huge profits. Some property projects involve an early completion and quick exchange during an auction purchase. Bridging loans cater for auction purchases. Once an auction is won, bridging loans can be granted within a 28 day time frame with the exchanged contract. This reduces the fear of losing an auction property.
Conclusion: Bridging loans is the way to go for short term and early funding for the purchase of any kind of property. Property investors rely on bridging loans as a preferred funding option on a wide range of projects. Projects may range from a new home purchase to an auction purchase or even renovation on an uninhabitable property.