Property transactions can be fast moving and having short term financial products can help. Property bridging loans allow people to borrow money temporarily to buy a property, invest in property or even some developments.
Bridging finance can be used by property buyers and investors to fill any temporary financial gap. Buyers may want to move into a new property but have not yet sold their existing property. Or investors may want to borrow money to get into position.
The bridging loan will depend on the lender, property, your situation and how you intend to repay. Knowing these can help determine if bridging finance is right for you.
When Can Bridging Finance Help
There are many reasons why short term property finance can be useful:
Buy to let – You may want to purchase another property but do not have the funds until you have sold your existing property.
Auctions – Often there are tight time frames to complete at auction.
Refurbishments – Some properties need a refurbishment before they can be put on the market with a traditional mortgage.
Investment – Investors may have a tight time frame when purchasing a property.
Refinance – If you are looking to get a long term mortgage but need some temporary finance then a bridging loan may be suitable with lender approval.
Each situation will be different so you should consider the costs, risks and how it would work.
What Should I Consider?
When looking at property bridging loans there are many factors to consider. The interest rate, arrangement fee, valuation fee, legal costs and length of the loan can all affect how much you will pay.
Your exit strategy is also very important. This will be how you intend to repay your loan. You may want to sell your property or re-finance to a long term mortgage. Consider what would happen if you had to wait longer to sell your property or your re-finance was not approved.
It is a good idea to shop around for lenders, be thorough with the terms of the loan and take professional advice if needed. Having a realistic repayment plan and budget can assist you in knowing what to expect.
Property Finance Options
Careful consideration should be taken when choosing the correct property finance for you. Silver Oak Capital helps clients in finding the most suitable property finance solutions according to their circumstances, properties and financing timelines.
Research has shown that, whether you are purchasing, bridging, or investing in property, doing research can enable you to make an informed decision.
