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Dreaming Of Buying A New Home But Worried About Loan?

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How is Bridge Loan Different?

✅It's Short-term. ✅High Loan-to-value Deal Can Be Availed. ✅Faster Application, Approval, And Funding Process. ✅Monthly Interest Rate Payments Can Be Deferred.

Ready to bridge the gap in your financial journey?

When it comes to providing enough funding for one’s asset acquisition, many buyers have probably heard all about property bridging finance. If you haven’t or if you have but are still clueless as to what it is then you better read on. We’ll let you in on what it is and how it can help you out.

For starters, property bridging finance is a kind of interim financing method or in other words it caters to short term needs only. It is deemed as a stop gap measure as it serves to connect the purchase with one’s permanent fund source, the latter being unavailable at the time of need or acquisition. How and when does such a case happen?

Remember that most if not all property acquisitions are funded through either of or a combination of the following: retained earnings, savings, accumulated income, sale and line of credit such as a loan and a mortgage. The setback about the aforementioned fund sources has something to do with time. Keep in mind that all that will require ample time to be made available. Retained earnings, savings and accumulated income for example are not a certainty. One cannot fully guarantee the exact time and day when your needed amount will be pooled up using these methods. As for a sale of another asset, that is uncertain too as one cannot fully tell when a buyer steps in and should one do, when payment is to be completed. For mortgages and loans, these two undergo or pass through an application to approval process which we all know can be long and tedious.

The dilemma for buyers comes in when the need to acquire is prevalent and any delay can cause opportunity losses, operations backlog and personal setbacks to name some. To avoid that, one can make use of property bridging finance to fund for the initial costs of one’s investment by settling the initial costs like the down payment and the first few installments to settle the contract of sale and close out the deal. It is then to be closed once the permanent fund source has become available.

Property Bridging Finance is one of the many funding methods available to property buyers today. In contrast however, these are short term funds which are used alongside your main funding scheme in the event that they are not made available on time and you already have to make the acquisition.

In most cases, a property is acquired and paid for using a loan, a mortgage, pooled funds or through the proceeds of a sale. The problem with all of these is that their availability is not certain or cut in stone. Take loans and mortgages for example. Their application is quite meticulous and their approval can take time if not at all. For pooled funds they would need a long period to complete and get to your target amount. In the case of using proceeds from a sale, one cannot know for sure when a buyer steps forward and when payment would be completed. There is no harm in using the aforementioned but property acquisitions are governed by factors such as time and competition.

If you don’t get to close the deal today, that is pay for the required down payment, you could potentially lose it to someone else. That would be bad especially if it’s a really good property at an affordable and reasonable price. That would be an opportunity loss. This is where you can use the benefits of a bridge loan. It basically connects the gap between your chosen fund (loan, mortgage, savings, sale, and etcetera) and the property by providing for the required down payment and sometimes the first few instalments on the remaining balance.

What makes property bridging finance great is also the fact that its repayment methods are very flexible, as follows:

·         First of all you can pay it with your regular income. As you get to save, you could immediately close it down as early as you can. Most providers do not restrict you in this area.

·         Second, you could do so once your main fund line has arrived. The remaining amount from that will then be used to pay out the remaining balance on the property.