Property bridging finance Overport
Bridging finance is becoming a more popular source of finance for those looking to raise money for a property purchase under a tight deadline. At Bayside Finance Solutions, we can provide the solution that could help you secure that new home in Overport.
A property bridging loan is a secured loan that fills the gap between making a purchase and other funds becoming available from the sale of your home in Overport. Because they are secured, you will need to own property, land or another high value asset to be eligible.
They’re often used to buy one property while you’re waiting wait to sell your existing one.
What are the benefits of bridging finance for your Overport property?
Turnaround time on property bridging finance is usually pretty quick, meaning you don’t need to hang around for weeks not knowing if you have been approved. Once approved, you get the amount into your bank account in a really short time.
Property bridging finance allows you to plan ahead in a positive way, even while the transfer is still in progress. All the different tasks that go along with selling a home are made so much easier.
Bridging finance is not long term debt, so it should not affect your credit credit score. Property bridging finance needs to be paid back in full once your home is sold. A property transfer often takes around three months, but it could actually take longer. Having a short term loan gives you peace of mind.
If you do find your dream home, there is no delay on your offer to purchase and bridging finance may be sufficient to enable you to make an offer to purchase, rather than delaying and risking the possibility of losing out to another Overport buyer.
What exactly is property bridging finance?
This kind of loan enables Overport homeowners to get money quickly to purchase the new home and then allow for them to repay at a later date when their other property sells. A bridging loan is a type of short term finance that aims to “bridge the gap” between the purchase of a property and its sale. Commonly used by property investors and developers, it is considered an alternative to the long process of applying for a mortgage and a way to access finance quicker.
The loan is repaid upon the sale of your property. There are additional uses for bridging finance as ways to raise money such as a business investment, paying for a divorce or for an individual moving home. A common factor is that there is a tight deadline so bridging finance gets you the money faster than if you were to go to a bank.
Accessing bridging finance can be accessible in around two to four weeks, compared to a mortgage from a bank which could take several months.
In case your existing home takes longer than expected to sell, and to help reduce your total loan amount, it is prudent to continue making repayments so you’re not left with a hefty lump sum to pay back. Bridging finance can be a tricky form of finance, so it’s worth getting advice from a someone who knows their business when it comes to mortgage to ensure you understand all of our loan requirements.
How property bridging finance works?
Property bridging finance allows home purchasers or sellers of property to have access to cash before the registration and transfer process has been completed.
The home seller is able to use the funds to pay rates and taxes that might still be outstanding. The buyer can use the funds to pay the transfer fees so that the transfer process is not unduly delayed.
Property bridging finance can be really helpful in getting you out of a ‘catch-22’ situation, where you have to hang around, waiting for the profit of the sale of your home to pay for the registration and transfer costs of your the Overport property you just purchased.
Before considering a bridging loan, it’s recommended you have at least 50% of your existing home’s value in equity, in order to avoid paying a sizeable amount of interest. And bear in mind that during the bridging period, you’re essentially paying off the interest on two properties, so selling your existing home is a priority
Are there risks of taking property bridging finance?
We make our customers aware that this is a slightly more expensive source of finance compared to a traditional bank mortgage and you could run the risk of your property being repossessed if you cannot keep up with repayments in the long-term. The biggest risk with bridging finance is overestimating how much you are going to sell your existing home for. If your home sells for less than what you anticipated, your bridging loan may not be enough to cover the cost of your new home and you could run the risk of ending up with a far bigger debt to repay.
If your existing home takes longer to sell or the sale falls through, you could find yourself dealing with a larger debt. The lender could also increase the interest rate on your mortgage if your existing property doesn’t sell within the allotted bridging period. finance takes away the pressure of having to match up settlement dates, letting you sell your house without worrying about losing it entirely. It is the best way of buying the home you want immediately without having to wait, letting you secure a new property without having to spend days or weeks worrying about selling your existing house first. It is also an ideal option for finance if you’re considering building a new home in Overport while you live in your current home.
Should I get advice?
Get advice about bridging finance before making any decisions. There are quite a few factors to consider when deciding on whether or not bridging finance is the right option for your particular situation:
- What period of time do you need the funds for?
- What is the average time properties are taking to sell in your area?
- How soon can you get your existing home ready for sale?
- Are you building a new house or buying an existing property?
- Will you be able to meet the repayments on your current loan and your bridging loan?