A bridging loan resolves a time-sensitive deal where traditional finance cannot. Auctioned properties –properties acquired in auctions must be paid for within 28 days.Bridging finance offers the speed to act in a competitive market. Purchasing your dream property – Having cash readily available in a competitive property market allows you to buy a home using a bridge loan before it slips out of reach.Here are some of the numerous scenarios in which bridging finance can be applied: This type of finance allows breathing room during stressful periods and capitalizing on opportunities. What are bridging loans commonly used for?īridging loans are flexible and can finance property for various purposes, but when is it the right financial option? You may be looking to downsize or upsize when purchasing residential property, or you may need to raise funds quickly for medical or care home fees for an elderly relative.Ī bridging loan can help bridge any gap, and its uses span further than many think. You might want to take a look at our bridging loan example page - here, we show you a hypothetical scenario, in order to explain bridge loans in a simplified way. No early repayment fees – A bridging loan allows you only to pay interest for the outstanding duration, incurring no similar repayment fees compared to traditional finance.Lenders are willing – With sufficient security, lenders are likely to consider borrowers that may not have a perfect credit history, and there are no stringent checks associated with traditional finance.Applicability – Bridging loans are flexible for different types of property, including residential, commercial, building plots, land without planning permission, and any other unmortgageable property.Time to find the right buyer – Capital raised from a bridging loan frees up options to improve the value of your home through home improvement and renovation. Fast financing to purchase property – Bridging the gap makes you a cash buyer, which is a more attractive option for a seller, and expedites the entire process.Here are some key benefits of bridging loans that you may want to consider: The loan is then repaid through the proceeds of the property sold. Because of the security, you can borrow as much as possible without worrying about interest rates (or early-repayment fees), as interest is "rolled-up" instead of being charged monthly. To successfully apply for bridge finance, you must have a sufficiently valued asset (typically a property) against which the loan will be secured. Generally, bridging loans are far cheaper than unsecured loans. A bridging loan works to finance challenging scenarios when traditional finance is not an option.
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