Why Using a Bridging Finance Broker is a Good Idea

If you are involved in property investment or development, you will be aware of how the speed of finance is a factor in the market.

A bargain may seem to appear from out of nowhere and can also disappear just as quickly. Moreover, to be as effective as possible, you need to be able to react rapidly in the market when an excellent deal is accessible to you.

To be ready to pounce on a great deal, you’ll need access to quick financing. Without adequate funding that you require whenever you need it, you will be forced to kiss goodbye to some great deals on the market.

Fortunately, bridging loans can give you the quick funds you will need to ensure not to have to miss out on a fantastic deal, that will yield the returns you anticipate.

Bridging finance is a surprisingly simple process. The financing you get is dependent on the value of one or more properties that you own.

Not only is bridging finance fast, but it also can be quite versatile. When it comes to interest rates and your repayment terms, you are going to be able to choose what is going to work best for your specific situation.

Because bridging loans are obtained quickly and with favorable conditions when finance is needed fast, bridging finance is a popular option among investors, landlords, homeowners, and specialists like property developers.

Why a Bridging Loan Broker

What is excellent about a bridging finance broker is the fact that they have contacts with many lenders and know the best prices in the market. They can compare the whole market and get the right deal for your specific conditions and needs.

Simply because you will not be tied to any specific institution, you’ll be able to explore the alternatives. Also, the broker is going to give you the very best options in the market.

Given that most brokers understand that they have to compete for your deal, this gives you leverage to negotiate and get the best possible terms.

Although the quantity you can receive from a bridging loan is according to the worth of a single or more property that you own, that doesn’t imply that you cannot borrow high Loan To Value, some lenders go up to 80% LTV even 100% Loan to cost.

When using a bridging loan broker, always remember to get alternative terms from them. Different bridging finance lenders use different valuators for assigning value for your property or house.

With some lenders, they favour using an open market Worth. For others, the preferred approach is always to use a below market worth. You are going to have the ability to get alternative terms for bridging finance from different lenders through a broker. The broker should also understand who will give you the best bridging loan rate and borrowing amount.

Once you recognize which bridging finance broker you want to partner with, you are going to be capable of nailing down the right terms for your particular conditions and requirements.

Choosing the right Bridging Loan Broker

  • Make sure the broker has experience
  • Choose a broker that works with many lenders in the market
  • Check any credentials the broker may have
  • Check reviews online such as google reviews or yell.com
  • Ask what they have done before to get a loan for other people
  • Check their website
  • You must make sure they are easy to contact
  • Understand the broker’s terms from the start
  • Ask what fee they will charge
  • Use a broker that charges fees on results only

Furthermore, the broker must negotiate fees and also the amount you would like; you can also review the interest rate and repayment terms for the financing, the broker should do all the negotiations on your behalf.

How Much Will a Broker Cost

Some brokers will not take a fee from you and will get their charge from the lender directly. Remember you are ultimately still paying for this. Others may charge a percentage of the loan amount; this is usually around 0.5% – 2% and some other may also charge you a nonrefundable fee to start the process.

The cheapest is not always the best, paying a little more to the right broker and he gets you more LTV or better rates, and better conditions will ultimately save you money.

So search around and discuss with different brokers your requirements and use the checklist above to find the right broker.

Conclusion

Each scenario is different, and the broker should be able to understand your conditions and take the time to review your details. The information will allow him to choose which lenders will have the appetite for your particular needs at the best possible rates.

Apply to buy a Home with a Bridging Loan

Bridging loans are short-term financial loans that individuals can use to create a deposit on a new house before they sell their existing residence.

It is used to help an individual secure a new property as they wait for their current home to sell. They can purchase and move into a new home in super quick time rather than waiting around for months as their existing home sells. These loans are getting popularity inside the market merely because they are fast to get.

There’s no lengthy process and due diligence period as opposed to standard mortgage loans, which assists in securing a new home without having delays.

It could be utilized just before obtaining a regular mortgage loan on the new house. The current home is typically put up as security to acquire the bridging loan.

It can get to be an issue when a new home needs to be purchased fast. Your current home is on sale; thus, a bridging loan is a way of providing essential money to get the new property.

The application process to obtain a Bridging Loan?

The bridging loan application method is simple, and it may be a rapid process. It would help if you had a bridging loan broker to help you with the process. They can help with applying it correctly and understanding all the documentation you will need.

The loan company will supply an application process form which requires completion with all the necessary documentation and submitted by you.

This loan has different types of costs, such as valuation, broker fees, arrangement fees, exit fees, telegraphic fees, and legal fees. Information about this will be offered from the loan provider so that the payment and bridging loan are processed.

Your specifics need to be offered inside the application together to avail this loan. The loan company might ask particulars about the new home that you wish to purchase with the finances.

You have to comply with the bridging loan terms and conditions. Also, any fees that are associated with obtaining the loan. Since you will be using the current house as security, you will need to supply home details for the loan provider. You’ll also have to give your solicitor’s professional information to start the process.

Right after the loan is processed, the money will remain for your account. The cash could be used to maneuver ahead with the purchase of the new home.

Using a Bridging Loan Calculator

It is a good idea to understand how much the loan will cost you over the borrowing period. One way to do this effectively is to use a bridging loan calculator.

There are many websites from bridging loan lenders and brokers who have a bridging loan calculator to use. I would recommend searching the term “bridging loan calculator” on google to help find a calculator to use.

The calculator will allow you to input all the fees and interest rate within it and show results on the actual cost of the loan and your repayment process.

Paying back the bridging loan

You have to pay the agreed interest with the loan terms. In the event the current residence is sold, the funds from the sale are then utilized to repay the loan debt, paying earlier will benefit you from saving on the interest. Keep in mind that there may be a charge to repay earlier than anticipated.

Important Factors to note

Bridging loans carry a higher interest rate than your regular mortgage. They can go as high as 2% per calendar month in some cases.

They have different kinds of fees associated with them in the costs. There are various ways of paying interest on a bridging loan, such as monthly or rolled up until the end of the loan term.

The lender will have a charge on the current property and failure to repay on time may result in your home getting repossessed.

What is a Bridging Loan?

A bridging loan is very different from a regular property loan, in what way? this article explains the ins and outs of a bridging loan and their uses.

A bridging loan is a short term property backed finance. They are typically used to fund you for an agreed amount of time while permitting you to either find a longer-term finance solution or the sale of your asset.

Bridging loans are sometimes offered for between 6 to 36 months, with the loan and interest payments due at the end of the agreed loan term.

In contrast to alternative types of borrowing, the monthly interest is commonly rolled until the term ends or you exit, therefore you have no further payments during the loan term.

The application method is typically way less complicated than for regular loans or mortgages and of other borrowing methods and the loan process can be completed within a week or two.

Bridging loans are offered typically against real estate assets and the money is used for the following purpose typically:

  • Buying a property via auctions
  • Buying repossessed property
  • Building work such as conversions or refurbishments
  • Purchasing “below-market property”
  • Buying a property being sold quickly for cash

Bridging Loans Pros & Cons

Take into account bridging loans are a risky proposition if you don’t know what you are doing, it is wise to understand what you are using such a loan for and to think carefully before taking such a loan for your projects.

The Pros:

When money is needed fast, the process can be completed within 10 days.

No monthly fees so as such cash flow is available without worrying, although the asset will be under “charge”

Purchasing a property under market value and getting the loan according to its current market value.

Borrow money on assets that you would not be able to raise capital for from a regular loan, such as repossessed or worn down property.

The Cons

Bridging loans come with higher interest rates, although they are getting cheaper due to the competition within the industry, they are still much dearer than a regular mortgage for example.

The loans are very short so you have no room in making mistakes with your project or goal.

Things to consider before choosing a bridging loan option:

Take into consideration the costs involved, remember the high-interest rate and other charges that come with this type of loan. There may be hidden charges, its prudent to use a bridging loan calculator. Learn more here
Have a clear exit strategy before taking out a bridge loan.

Is your project viable? the asset could be at risk if you don’t pay the loan as agreed.

If for example, the exit strategy is to sell the property and make a profit, make sure you have time available to put the property on the market and find a buyer or you may have to sell it quickly if time is running and miss out on full profits.

If the exit strategy is to get a long term to refinance, make sure you will pass the application process or you could be stuck in a dilemma.

Getting the best deal, always check with a few lenders rather than a sole lender to get the best possible deal for your project.