With property investments and development projects, you frequently encounter issues that call for fast-access funding. Something that is not typically available on the High Street, calling for the help and support of bridging finance.
Bridging loans are designed to temporarily ‘bridge’ financial gaps over a comparatively short period of time. Flexible and highly cost-effective, a bridging loan repaid promptly can be significantly more affordable than any comparable loan or mortgage.
But what specific types of projects are borrowers across the UK realising right now thanks to flexible bridging finance?
Bridging Gaps in a Property Chain
A familiar scenario for many is where the sale of a property falls through at the last moment and prevents you from purchasing your dream home; a common nightmare for homeowners looking to relocate, potentially positioning them back at square one.
Using bridging finance means the funds can be raised quickly and conveniently to ‘bridge’ this gap. You take out a bridging loan, you use the funds to buy your dream home and you repay the balance in full when your current property is sold; a simple and surprisingly affordable way to bridge these common gaps in a property chain.
Buying Auction Properties
Picking up bargain properties at auction is also possible with affordable bridging finance. Properties often go under the hammer at auction for significantly less than their true market value. However, the full balance owed must be paid by the winning bidder no later than 14 days after the event.
Conventional mortgages and home loans are therefore not an option for auction property purchases. With bridging finance, the funds needed to complete the purchase can often be accessed within a matter of days. This is Ideal for those looking to purchase fixer-upper homes at low prices which would otherwise be inaccessible.
Purchasing Unmortgageable Properties
Conventional mortgage providers are largely unwilling to lend against non-standard properties. This includes most types of dilapidated and uninhabitable homes, which are considered unmortgageable by most major lenders.
Properties like these are often extremely attractive to investors and developers interested in renovating and improving them to be sold on at a profit. Not only can bridging loans be used to purchase properties in any state or condition, but the fast-access nature of the facility makes it possible to beat competing buyers to the punch.
All with the benefit of unbeatably low monthly interest rates and overall borrowing costs.
Renovate and Sell
Anyone planning to put their home up for sale understandably wants to get the best possible price; precisely why most homeowners perform minor interior and exterior tweaks to boost the curb appeal of their homes.
Taking things a step further, bridging finance can be used to perform the kinds of renovations that can maximise a property’s market value. Kitchen refits, loft conversions, garden landscaping - all capable of delivering the kind of ROI that goes far beyond the costs of the renovations.
The balance of the bridging loan is repaid when the property sells, with the remaining proceeds being retained as pure profit.
Author: Craig Upton
