Reasons To Choose Bridging Finance
There are several reasons for needing bridging finance – from purchasing a new property while selling another to paying a time-critical tax bill to cover shortages in supplies. Read on to discover the seven most common reasons to choose and how much a bridging loan costs.
To purchase property while waiting for another to sell
This is the most prevalent reason for requesting a bridge loan. Many individuals become caught up in real estate chains. They wish to buy a property but are stuck in the middle because their current property’s buyer is unable to complete the transaction, perhaps because they’re waiting for the sale of their own property to finish, and so on.
A bridging loan is a short-term borrowing that may be used to buy a property, then repaid once funds from the sale of existing property are received.
Planning permission might be required for a long-term loan for site development. A bridging loan may be used to finance land purchase if the developer is certain that planning permission will be granted.
When credit is refused
If a borrower’s poor credit history prevents him or her from obtaining a standard loan, some bridging financing firms will evaluate a loan application.
Whatever the cause for your need for a bridging loan, you’ll need to put up security in the form of property to guarantee it. Some providers, like when applying for Bridging Loans from Finbri, for example, may consider other commercial assets as collateral.
Buying at auctions
A standard loan may take more than 28 days to complete. A bridging loan is much quicker and may be obtained and used to finish the auction purchase, after which it can be reimbursed.
Short-term working capital is required by many enterprises. This is frequently due to a temporary drop in cash flow caused by the business’s seasonal patterns. Bridging loans may also be used to finance stock and equipment purchases.
Developing unlivable properties
If the property is bought in a dilapidated or uninhabitable condition, many mortgage lenders will be unable to offer a mortgage for the purchase. A loan can be obtained to buy the property and pay for the construction work. A mortgage may be put in place once the house is livable.
Paying unexpected tax
Occasionally, a business is presented with an unexpected tax levy that it cannot pay in time. A bridging loan may be utilized to pay the tax and avoid any late payment charges.
As you can see, there are many reasons to choose bridging finance, depending on your situation and needs. If you wish to learn more about what bridging loans can do for you, reach out to an expert who will be happy to help. They will run you through the pros and cons, process, and costs.