How Short-term Bridging Loans Are Assisting Property Professionals In Their Business?
Any individual or a business can be in a need of a short-term business loan for various purposes, like purchasing a property, launching a new project, or some refurbishment. There are situations when one needs easy and quick funding. Bridging loans are the best option and are widely growing in popularity. In this article, we will explore how these loans can assist property professionals in their business. The top advantages of bridging loans are:
1. Security a property at Auction
If you buy property at auction, you will have to submit the deposit straight away. The balance amount is to get paid within 30-60 days. You cannot even imagine relying on traditional financing in such a situation. But with a bridging loan, you can get the deal done instantly. There is one more way in which it helps at property auctions. You can also use these funds to get your property presentable prior to an auction. Traditional funding is always time consuming and never a quick option.
2. Buying a property without a planning permission
Planning permits is a must to get a traditional development or construction loan for a property. But you can use a short-term bridging loan to buy land that does not have planning permits yet. If you are confident enough that concil will grant the permission, you can go ahead with this loan type. After approval, you can consider switching to long-term development finance.
3. Completion of renovation and construction work
You may run out of cash in the middle of construction or renovation work. You may need to buy some extra equipment or get hire some more tradesmen. Even if you have a budget at the start, you can need money mid-way of building a new project. You can rely on a bridging loan in this scenario. Some other ways in which bridge financing is beneficial are:
4. Get loans of all sizes
Along with being secured, bridging loans are highly flexible for how much you can borrow. If you are an SME developer who needs a small amount of money, bridging is your option. Loan sizes are generally determined by the amount of equity that is available in the property being used as security.
5. Get a speedy turn-around
Loan approval from a bank or any financial institution is much trickier than arranging bridging finance. Bridging lenders have very little documentation required and credit score is irrelevant. It means that you will get faster access to capital and makes bridging finance an emergency type of loan. In a situation where you need money immediately, this financing is a great option.
6. No barriers to lending
Imagine yourself in a situation where you want to purchase a property that requires a lot of renovations. Relying on a traditional lender for financing is not ideal here. It is because your loan will not get sanctioned if the property is uninhabitable. Bridging lenders will base their decision on the current value of the property rather than its condition. So, getting a short-term bridging loan is much simpler.
7. There is no need to pay an early repayment penalty
In case you need money for a job that does not have an exact finishing deadline, bridging is the best solution. This loan also comes with an expiry date of when you have to repay. Since it is a short-term loan, the loan tenure is between 1 to 12 months. However, there is no penalty for early repayment. So you can pay off whenever you are ready.
End Thought
Bridge financing is for filling in the gaps when you need funding fast. Earlier, these loans helped the property purchasers with ease. But today, these are helpful for property development as well. They have a versatile nature to benefit business owners as well as developers.
