What is a bridging loan?
A bridging loan is a temporary loan that allows you to get funds that you need before you can be able to refinance or qualify for a long-term loan. If you have a property that you really want to buy and you don’t have that amount in hand, the you could use bridging loans to acquire the property as you wait to get more financing later. So if you need a bridging loan for property development then these are very good reasons why you should not hesitate to apply for one.
Advantages of Bridge Loans
- You gain control when you purchase the property
When you apply for a bridging loan, you can acquire the property you desire at any time since the lack of cash will no longer be a barrier. For instance, when you want to acquire a property worth $100,000 and you have applied for a long-term loan the property you want is on a very high demand. What do you do? A feasible way out is to obtain a bridging loan that you will pay off when your long-term loan has been approved.
- You get funds before your property sells
Everyone has his or her preference and it feels good to find a property that fits your preference. Problem is when you find the right property at the wrong time; times when you have not sold your property. It takes time to sell a property so you may not be able to raise the cash with short notice. Scenarios like these are great for bridging loan to meet your financial needs prior to the sale of your property.
- No Monthly Repayment
With a bridge loan, some lenders may not require you to pay in monthly installments but will only need you to pay the whole amount once you have sold your property.