Bridging Finance
Benefits of Bridging Finance
There are several situations why you would need a Bridging Loan, these are just a few of the most common reasons:
Speed
Unlike traditional loans, bridging loans are processed quickly, often within days.
Flexibility
Borrowers can use funds for various purposes beyond property transactions.
Short tern Solution
Perfect for managing temporary financial gaps without long-term commitments.
Opportunity
Allows you to act swiftly on time-sensitive transactions, such as property auctions.
Real Life Bridging Loan Scenerios
Mr & Mrs Kelvey
Mr and Mrs Kelvey were looking for their retirement home and after months of searching they had found the perfect one.
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However, they still needed to sell their current home, and the seller couldn't wait. They didn't want to miss out so they got a bridging loan to purchase the new property and paid it back once their current home sold
Mr & Mrs Chun
The couple used bridging finance to purchase property via an auction with a 28 day time frame.
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The property required a full refurbishment and they wanted to have that all completed before they moved in as it wasn't practical with 2 small children living in a building site.
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They completed the work in 5 months and refinanced onto a normal mortgage product to repay the bridging loan.
How does Bridging Finance work?
1. Application - You provide details about the required amount and purpose of the loan.
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2. Approval - Upon assessment of your financial situation and security asset, the loan is approved quickly.
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3. Funds Transfer - Once approved, funds are transferred promptly to facilitate your needs.
4. Repayment - Pay off the loan within the agreed term, either through asset sale proceeds or refinancing.
Bridging Finance - Frequently Asked Questions
What is bridging finance used for?
Bridging finance is typically used for real estate transactions, such as purchasing a new property before selling your current one. It can also be used for renovations, business needs, or auction purchases.
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How quickly can I get a bridging loan?
Bridging loans are designed for speed and can often be processed and approved within a few days
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What is the typical duration of a bridging loan?
Most bridging loans are short-term and last from a few weeks to 12 months.
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What security is required for a bridging loan?
Bridging loans are usually secured against an asset, such as real estate or other high-value property.
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What are the interest rates for bridging loans?
Interest rates for bridging loans tend to be higher than traditional loans but are competitive due to their short-term nature and secured status.
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Can I get a bridging loan with bad credit?
Approval depends on the value of the security asset and the repayment plan rather than solely on credit history, making it possible to get a loan even with poor credit.
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How do I repay a bridging loan?
Bridging loans are typically repaid through the proceeds of a property sale, refinancing, or other planned financial arrangements.
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What happens if I can’t repay the loan on time?
Failure to repay on time could lead to additional interest or penalties. It’s essential to have a clear repayment plan in place.
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Are there fees associated with bridging loans?
Yes, there may be fees for arrangement, valuation, and legal costs. Always check the full terms before proceeding.
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Is bridging finance regulated?
Not all bridging finance is regulated, it all depends on the type of bridging loan you require. If it for a residential property for you to live in, then it will be regulated. If it's for investment purposes, it will be unregulated
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