Bridging Loans: What You Might Need These for and Everything You Need to Get One
Property investments sometimes fall through due to the investor not having the deposit, or the original lump sum readily available. Often, a property investor may apply for a bridging loan from a commercial broker, as these applications have a turnaround of just a matter of days and are of course a lot quicker than the standard mortgage.
Bridging loans can pretty much be used by anyone that needs to make a purchase in a short amount of time. However, here are just five of the most common reasons as to why an investor may need a bridging loan:
Chain Break Finance
It isn’t uncommon for a property chain to break in one of the final stages of a transaction, and it can be incredibly annoying for the investor or developer involved. A bridging loan, also known in this case as ‘chain break finance’, can be used to cover your finances while you find a new purchaser for your property.
The sale of the property will therefore continue to go ahead. Without a bridging loan, the purchase of that property would have fallen through completely.
Some property investors visit auctions not expecting to purchase anything at all, and therefore won’t have any funds sorted prior to visiting. However, if a great opportunity arises at an auction, it would be a shame to have to let it go to someone else. This is again where a bridging loan comes in useful.
Most mainstream lenders refuse to lend to investors that are developing a property that isn’t really in the best condition. However, bridging lenders (also development finance brokers) consider both the future value of the property, as well as the overall ROI, and make their services readily available as they will be able to see the benefit.
If you’re interested in purchasing an abandoned property, then it might be worth checking out this post first for some handy advice.
If someone is in need for some quick funding in order to finance the conversion of a property or maybe even add an extension, then a bridging loan could be used for this.
Bridging loans can cover everything from initial business establishment costs to unexpected shortfalls, and even urgent tax payments that may be required, and this can often be a life saver for most business men and women who need to pay large sums within a short amount of time.
If you think that you fit into one of the categories above, and you’re in need of bridging finance, then get in touch with a reliable independent finance broker, such as Pure Commercial Finance, who will be able to help.