Bridging Finance Help

2. Bridging Finance

Bridging finance is a way to use money for short term loans that are used to bridge the gap between when you have to make a payment on a new property to help in the time frame between when you will receive money from an old property and when you close. It can be considered a form of equity or a quick line of credit to help you close or make a purchase as you go from one transition to the next, hence bridging the gap. Bridging finance is designed and set up to help people to complete the purchases of various properties that they’re trying to buy and obtain. The downside is that at times, this short term access to money can sometimes come at a high rate of interest because its money that while given to bridge the gap, has to be paid back sooner and with higher interest, so you can take out this loan while this it’s understood that has to be paid back right away.

Another area where you can utilize bridging finance is when you’re purchasing a home that you buy at auction and you know that you’re going to sell the property. You can use your bridging loan to help you to flip this property. Do keep in mind though, that with a higher interest rate you can set up your payment plan. You may want to shop around as your terms can be from 2 months to 3 years, but again, it will depend on the lender and how the bridging loan will be set up.

Is a Bridging Loan Right For Me?

If you are asking yourself if bridging finance is right for you, when you decide if you want to pursue bridging finance or not, you should consider whether or not you’re ready to deal with a higher interest rate. Keep in mind, sometimes with a bridging finance loan you could be hit with interest rates that may be 1.8 % per month it could be about 20 % a year depending on how long you take out the loan. There may be higher fees associated with it and you want to ensure that you invest with a company that’s going to give you a good loan, a quick return, and that you won’t have to worry about higher fees which may make it harder for you to secure your loan and pay it back.

Can I Afford It?

At the same time you’re thinking about the fees, you want to ensure that you don’t take out a bridging finance loan if there’s any type of question or if there’s any thought in your mind that you won’t be able to pay this loan back because the interest rate is so much higher. Remember this is to bridge the gap in between making a purchase and stepping away from an old loan. But, consider this. Let’s say for example something happens and your deal falls through at the new, and/or old properties then you’re stuck with your old original property, but worse than that, you may be stuck with two loans and a bridge loan if you try to sell the new property and can’t, and try to sell the old property and can’t. Then on top of that, you still have a loan that you have to pay back. These are things to factor into your decision to take out a bridge finance loan.

When you’re ready to find out more about bridging loans, just let us know. In some cases, we can get you approved right away and you’ll find you can get started on that project, make that down payment or pay off that credit card debt.