Property transactions can be stressful, which is why bridging finance can take the weight off your shoulders.
But what is bridging finance for property purchase, and why should you consider it for your next transaction?
Below, we explore seven key benefits of bridging finance to help you understand how it can ease the process and even create new opportunities.
1 | Bridging Finance for Property Is Speedy
One of the most significant benefits of bridging finance is its speed.
Traditional mortgage applications can take weeks or even months to process due to lengthy approval times and complex paperwork, however, in contrast to that is bridging finance. Instead funds can be arranged in days, making it an ideal choice for buyers working under tight deadlines.
For instance, if you’ve found your dream property but risk losing it to another buyer, bridging finance ensures you can act fast and secure the property without delays from a mortgage.
This speed makes it a firm choice for property investors and developers who need immediate access to funds so they don’t lose out on long term rewards. With the right bridging company, the entire process is streamlined, offering peace of mind when time is of the essence.
2 | Property Chains Can Be Saved with a Bridging Loan
Property chains are notoriously fragile. A single delay or breakdown in the chain can jeopardise months of planning and cause significant financial loss, so what is a way to save this chain and keep it flowing from one to the next?
The answer, property bridging loans and finance.
Bridging loans are an excellent way to prevent chain collapses by providing sufficient funding to keep the transaction moving, for example, if you’re waiting for the sale of your current home to go through before purchasing another, bridging finance can bridge the gap, as the name suggests, allowing you to complete your purchase on time.
By stepping in where traditional financing might fall short, bridging finance in the UK is increasingly popular for buyers attempting to understand the unpredictable nature of property chains.
3 | Bridging Loans Allow You to Act Fast
The property market is incredibly competitve - especially when good prices come along; thus, acting fast is essential.
Whether it’s an auction purchase or a time-sensitive investment opportunity, bridging loans provide the financial agility needed to stay ahead. Unlike conventional mortgages, which often involve lengthy pre-approval processes, bridging finance offers a more flexible approach tailored to your immediate needs on a case by case basis.
This flexibility is particularly beneficial for those who are seeking to expand their portfolios in property, property investors don’t have time to waste. So, with bridging finance, you can seize opportunities as they arise, without worrying about missed opportunities or funding delays, ensuring you stay ready in a fast paced market.
Property is only profitable if you secure the right price from the get go, staying within your budget and even securing properties below your budget is going to open the door to more income. These properties don’t stay on the market for long, in fact they are highly sought after, especially in major cities.
Bridging and development finance can ensure you keep this competitive edge so you can maximise your profits.
4 Bridging Loans Can Make You Profit on Property
Speaking of profit, bridging finance for property is the solution to keeping property chains active and ready to make you money.
House flipping, buying and reselling and renting out to tenants are all profitable business prospects when done correctly. However, without the right appeal, you could be losing unnecessary cash, so make the property selling worthy with the right renovations in place.
The difficulty is, it might take months to work up the cash to put these renovations into action and this not only allows the house to sit and lose value, but wastes your time too. With bridging finance, you’re able to utilise the cash to implement renovations and boost the property price and then sell.
Once you have sold the property, or began renting it out, you can pay off the bridging loan and find longer term financing if necessary. Simple!
5 | You Can Avoid Long Waiting Times by Using Bridging Finance on Property
Nobody likes waiting around, assets lose value fast, so it is important that the only time spent is increasing that value of the property.
Using traditional lenders for property can incur long waiting times that can often make for missed opportunities. In order to bridge this gap, a finance bridging company can help speed the process along.
Bridging finance for property development, land and alike instances can be released in as little as 48 hours, making for a much more reactive way of property investment; this immediacy allows buyers to proceed with their transactions without unnecessary delays.
For example, if you’re purchasing a property at auction, bridging finance for property purchase ensures you can meet the strict 28-day payment deadline required by many auction houses. This speed gives you an edge over competitors who may be relying on slower, conventional financing methods.
6 | It Can Be Used for Both Commercial and Residential Properties
The good news with bridging finance is that you can make profitable investments with both commercial and residential properties.
Typically, there are stark differences between commercial and residential rentals and purchases due to different levels of compliance and regulations. However, bridging finance can be used regardless of the property type.
So no matter if you’re buying a second home for personal use, or investing the money into a property investment chain, you can still benefit from the utilisation.
7 Some Lenders Offer ‘No Minimum Loan’ Promises
A key attraction of bridging finance in UK markets is the ‘No Minimum Loan’ promise - but this doesn’t go for everybody.
Some lenders do offer this, like MS Lending Group for instance but not all. Some lenders may put a minimum loan in place meaning you can’t use their services unless it is over a certain amount.
A minimum loan promise is very useful for those that are just starting their investments, meaning they’re focusing on smaller projects first and thus, opening up to further opportunities for larger projects in the future.
Frequently Asked Questions
What are the advantages of providing bridging finance in property transactions?
Bridging finance offers speed, flexibility, and the ability to act quickly on property purchases or developments. It also prevents chain collapses and can be used for both residential and commercial properties.
Is it a good idea to get a bridging loan?
Bridging loans can be an excellent choice if you need quick, short-term funding. However, they may not be suitable for everyone, so it’s important to weigh the costs and benefits based on your circumstances.
What are the cons of bridge financing?
While bridging finance offers many advantages, it typically comes with higher interest rates than traditional loans. Additionally, borrowers must have a clear repayment strategy, such as proceeds from a property sale or refinancing.
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