Although there’s nothing wrong with being a newbie at something, it most definitely comes with a lot of work. Starting from scratch sure isn’t an easy road to tackle but we all begin here and there’s no shame in that. The only way is forward and that said here’s a guide on how you can navigate the jungle that is property bridging finance.
What is it?
Property bridging finance is a short term or temporary loan taken out pending the availability of a bigger and long term financing (e.g. mortgage, proceeds from a sale, income and bank loan). It acts as a stop gap measure that connects short term liquidity and immediate needs and one’s main fund line that is yet to be available at a later date. It can also be referred to as a caveat or a swing loan.
What it does?
Essentially, property bridging finance is designed to cover the initial costs that come with acquiring real estate assets. Since this type of transaction requires several expenditures prior to and exempt from the list price, many buyers and investors find themselves having to lose out on several opportunities because of a timing constraint.
Let us not forget that coming up with adequate financial resources, especially one that’s enough to cover a hefty acquisition such as a property, takes considerable time. This applies to all sources be it income or credit. Where the former takes long to pool, the latter takes long to process and receive due to their often meticulous procedures and requirements.
That calls for some serious problems especially with regard to initial costs. Things like research costs, professional fees, survey expenses, security deposits and down payments all have to be funded for. Most if not all of them are upfront and pressing and without them, no asset acquisition shall transpire.
The role of property bridging finance is to provide for these and even up to the first few monthly installments on the remaining balance. This way, investors need not have to wait further or worse lose the deal to another interested party. What’s great is that it’s temporary in nature and lasts from two weeks to three years. Providers also allow for flexible repayment schemes where users have the liberty of closing the bridge prior to or at maturity whichever they find most suitable and appropriate to their means and situation.