Commercial Bridging Finance Could Be Your Saving Grace

commercial bridging financeWe all know that buying any real estate property, especially a commercial one, is no joke. Not only are these assets more in demand but they tend to rake up some serious cash too. Not surprising as they are often situated in prime areas around town. Add in the factor of competition and things have blown up but not beyond any smart investor’s reach. They make use of a tool called Commercial Bridging Finance.

But what is commercial bridging finance? Simply put, it is a type of short term loan that bridges the gap between the pre-purchase costs and short term liquidity needs to the pending permanent and often bigger source of funding (e.g. mortgage, sales proceeds, bank loan, income, and etcetera). We all know that pooling a sum as huge to finance such an acquisition takes time either because the source needs to be pooled over a series of months or processing it is downright meticulous and sometimes even both.

So why not wait? Patience is a virtue but sometimes it’s not the best way to go especially when we’re talking about a commercial property that’s hot in the eyes of investors and buyers. A good asset won’t stay up for sale for a long time because people will want to grab the opportunity as quickly as they could.

If we don’t have the resources yet, how do we play the game? Do we just pass? Not necessarily because in business an opportunity lost can also mean financial losses. Since a commercial bridging finance was designed to cater to immediate and short term liquidity needs, it takes care of the pre-purchase costs or those expenses that need to be provided for to make the transaction happen.

Oftentimes, it covers the research expenses, the professional fees (e.g. lawyer, real estate agent and surveyor), the tax requirements and most importantly the security deposit and down payment which seals the deal. This way, the commercial asset is secured before anybody else.

So are we saying that a second loan must be had? Technically, a commercial bridging finance is another loan but it is short term in nature and is an interim method not a permanent and long term one. It spans only a couple of months to at most of two years until one’s permanent funding becomes available which at the same time will close and pay up for the bridge. Visit this website Alternative Bridging.




Property Bridging Finance: What You Should and Shouldn’t Do

property-bridging-financeReal estate is tricky and not to mention a lot of work. Moreover, it can be particularly hefty when we talk finances. For instance, there’s more to costs than just the asset’s price tag. Security deposits, down payment, research costs and professional fees form part of pre-acquisition disbursements. Luckily, there’s this thing we call property bridging finance.

This particular type of credit allows borrowers to take hold of immediate funds for their short term liquidity needs when permanent financing falls short on timing and availability. As a stop gap measure and interim fund, it has allowed investors to skip the opportunity risks and losses that would have otherwise been present.

But even such a powerful tool isn’t going to work and provide benefits if used incorrectly. It has been designed to fit specific uses and purposes after all. So what should we and should not do when utilizing property bridging finance? 

Understand how it works. Before even employing it, make sure to have understood and read up on how it works, what it entails and its limitations are. Is it even the right fit for your needs, case and capabilities? There are many available resources from books to magazines to online articles. One can even talk to an expert for guidance.

Never use it for what it’s not. A common mistake among borrowers is that they use property bridging finance in the long run to replace their permanent financing. This should not be the case as it is first and foremost designed to act as a temporary loan that fulfills short term liquidity needs. 

Budget and use the funds wisely. Money is not easy to come by and even if bridging loans are easier to process and are made available faster, this gives no one an excuse to use the cash haphazardly and irresponsibly. Allocate the resources wisely. Learn to prioritize and monitor expenditures. Veer away from wastage.

Never enter without an exit in mind. At the end of the day, property bridging finance is still a borrowing. As a liability, one has the legal obligation and responsibility to repay the provider as mandated in the terms and conditions of the contract signed. Providers offer users two options in terms of repayment either at maturity or prior to maturity. Regardless of the liberty enjoyed, one must still map out an exit route and plan ahead of time so that closing the bridge won’t be any hassle or budensome.

Find out more at this page, http://www.alternativebridging.co.uk/development/