Sometimes when you are caught up in your project that you often tend to overlook the budget that you have. So, you rely on getting a loan. There are many types of credit that you can apply for, and one of them is a short-term funding type which is what we call bridging loans. Here are some things you need to know about bridging loans.
Bridging Loans are Quick
When you have the perfect property for your portfolio, there is only a small window of opportunity for you to be able to complete the sale. That is why more people are applying for bridging loan since it is quick access to capital.
Since bridging loan is a short-term solution, you can ensure that you have the funds you need within the deadline, making you secure that perfect property that you are dreaming.
Bridging Finance is Flexible
Bridging loan is much more flexible than that of traditional mortgage or high-street lending. Mainstream lenders will often require more information from you, like your income and credit history before they will agree to a loan. While on the other hand, bridging finance lenders will need to know about the property as it is the property that is used to secure the loan.
The payment terms can often be amended to suit you. Most bridging finance lenders require you to pay them back within a year, and it is imperative to keep that in mind.
A tip for you is that you should always have an exit strategy in place so that you can avoid running into difficulty.
You Can Use Bridging Loan For Almost Any Property
The property is one of the essential factors in securing a bridging loan. Fortunately, these loans can be used to purchase all types of properties like houses, flats, and apartments, commercial units, lands, and shops.
You can access finance for a new addition to your property portfolio regardless of the type of property that you want to secure the loan. In other words, you can obtain the loan against a property you currently own, rather than the one that you are using the credit to buy.
Property Development Financing
Another fact that you need to know is that bridging loans can support you throughout the entirety of the property development project. It is vital if you are a property developer and trader. Let’s say you wanted to develop a property and sell it afterward, but you do not have the funds, then a bridging loan is what you need.
It will allow you to access the financial help you need quickly, providing you the money in stages throughout your renovation project. It can help you complete the work according to your ideal deadline and the loan paid back when you sell the property.
Renovating Houses That Are Uninhabitable
Some people are looking for uninhabitable property and restoring them. It is now entirely possible with bridging loans. High-street lenders usually will not provide finance for property investors to renovate uninhabitable properties for these are considered to be of high risk.
There are still potential though in renovating houses in unhabitable places especially for those who want to build the project from scratch. Bridging loans can help you restore these places until the property has reached habitable condition.
Just a reminder though, renovating uninhabitable properties can be a grand strategy, but this requires experience. You need to ensure that you find the best builders and a contingency plan so that you won’t get hit by unexpected development costs.
Purchases at Property Auctions
If you are the type of person that goes to property auctions, then bridging loans can help you with that. Auction purchase requires a swift completion and instant exchange. With bridging loans, you don’t need to worry that you will lose the property at some point during the process, as when you win the bid, there will be an exchanged of contracts, and you can get the finance to complete usually within 28 days.
It will open up a new market to many buyers and where can you find a great place for that hidden gem is through the auctions. It will be an additional property for your portfolio at a better price.
Bridging loans is one way that you can quickly get access to money to help you in financing properties. You should remember that you need to plan it out very carefully. Look for the best bridging loan broker and make sure they know the time-frame you are working. Do not hesitate to ask questions so that you will a clear understanding of what you are dealing with, in this way; there’ll be no miscommunications.