Bridging Loans Birmingham
Do you need a bridging loan to solve your cash flow problems? These loans are an excellent choice for bridging the gap between selling a property and receiving the money, among other things.
That the loans “bridge” financial gaps is the reason for the name “bridging loans.”
How do bridging loans work?
A bridging loan is used to stem a temporary cash flow issue. One common example of when bridging loans are used is when someone wants to purchase a new home but is still waiting for their existing home to sell. Depending on the circumstances, bridging loans offer short-term finance solutions.
Bridging loans accrue interest but don’t come with monthly payments. You agree to pay the full principal amount plus interest at the end of the loan term. Consider the full amount you’ll repay when filing a bridging loan application.
Bridging loans have shorter lending periods than traditional loans and mortgages. These loans last between 12 and 24 months on average.
They are a short-term financial solution for people who need money quickly. They are not a replacement for a traditional mortgage.
As with any other form of financial product, you should avoid borrowing more than you can afford to repay. Take careful stock of your current and future financial projections before applying for any kind of loan.
When is a bridging loan used?
Applicants can use bridging loans for several purposes, including:
Getting an edge on the competition
A bridging loan means you can quickly secure prime property before someone else does – even if you haven’t sold your current property yet. Beat out the competition for your dream home with a bridging loan.
Supporting breaks in the chain
Bridging finance helps you get through a property purchase even if something goes wrong. If the sale of your old house falls through, for example, a bridging loan gives you the money you need to secure the purchase of a new one. You can pay the loan back when the sale goes through.
Buying auction property
Buyers generally have to pay a 10% deposit when buying property at auction. A bridging loan covers this cost while you work on getting the rest of the money you need to finalize the deal.
Get money fast
A bridging loan is a helpful temporary cash flow solution there for you at any part of the property purchasing process. Having the option of moving money quickly makes all the difference when buying or selling property.
A bridging loan is a good choice for anyone looking to buy property to redevelop it. The money from the loan helps you get the project going. Given that some mortgage lenders won’t offer mortgages for properties that need redevelopment, a Birmingham bridging loan could be your best bet to get the property.
Types of bridging loans
There are two varieties of bridging loans:
Open bridging loan
An open bridging loan is for someone who has found a property they want to purchase but has yet to sell their current property.
Lenders are typically reluctant to offer open bridging loans due to the potential the home won’t sell and they won’t get their money.
You can increase your chances of a successful application if you have plenty of equity in the existing property.
Closed bridging loan
A closed bridging loan is for those who have exchanged on a property and need the finance to secure the purchase.
This form of bridging loan is easier to come by than an open loan. Lenders consider it unlikely that the sale will fall through, meaning they are more likely to get their money back. As such, they are less hesitant about offering it in the first place.
Secure a bridging loan today
Bridging loans offer a financial bridge from one point to another. They are typically used during real estate purchases, with the money for the loan coming from a property sale.
Please don’t hesitate to contact us if you have more questions about bridging loans.
We always recommend trying a few different providers to get the best possible deal on your bridging loan in Birmingham. If you would like help with calculating fees, then use our bridging loan calculator.