What is a “bridging loan” and for whom is it intended? This term sounds like it belongs in a glossary of real estate terms.
A bridging loan, to put it simply, is a short-term financing choice that spans the distance between the acquisition of a new property and the sale of an existing one. For real estate investors and developers who need immediate access to funds to take advantage of a time-sensitive opportunity, this sort of financing can be a lifesaver.
However, a bridging loan can be advantageous to other parties besides investors. This sort of financing can give property sellers immediate access to capital, which is a benefit. This can be helpful if they need to make an offer on a new property before the sale of their current property is finalised, or if they need to cover expenses or pay off debts before the sale is completed.
Get quick access to capital
The quick access to funds that a bridging loan offers is one of its key benefits. While the application procedure for traditional house loans might take weeks or even months, the application process for a bridging loan is usually much faster. This can be especially useful for property investors and developers who need to act quickly to take advantage of a good opportunity.
A bridging loan provides flexibility
Another advantage of a bridging loan is the flexibility it offers. They typically structure these loans in a way that allows the borrower to repay the loan when they are ready – for example, when the sale of their property is complete. This flexibility can be useful for borrowers who need a cash advance while they wait for the registration of the property.
While it’s true that bridging loans can be expensive and carry a certain level of risk, they can provide the flexibility and speed that is often necessary in the fast-paced world of real estate. Overall, bridging loans can be a useful tool for property investors, developers, and sellers looking to navigate the property market with confidence.
If you’d like to talk to a Property Bridging Consultant, please call us on 031 830 5205. Or visit our website for more information.
Future Finance is a licensed financial provider offering Property Bridging Finance for Property Sellers and Estate Agents.
