Bridging Loans Explained
Imagine this scenario: you’ve finally sold your home or business property and the settlement is a 6 weeks away. This is fantastic news, but then you find your dream property, the absolute perfect replacement for your next home or business location. Your real estate agent warns, if you hesitate, you could lose your chance to submit an offer, but you have 6 weeks to wait before you get the funds out of the sale of your old property for your new down payment. The anxiety sets in. Someone else could snatch up your dream property! What is a buyer to do?!
Fear not, this is the ideal time to use a bridging loan. Bridging loans are temporary finance for an individual or business while waiting for something, such as the settlement of a property or obtaining a larger amount of finance.
Bridging the Gap with a Bridge Loan
A simple way to think of it is like a bridge that that allows you to cross from one side to the other. On one side of the bridge is the property that is awaiting settlement. Underneath the bridge are your temporarily inaccessible funds. On the other side of the bridge is your new property. Bridging loans bridge the gap by giving you the funds you need to act quickly on opportunities. Once the sale of your property occurs or the larger sum of finance comes through, the bridging loan is repaid. Viola!
Now you can not only celebrate the sale of your property but also the purchase of a new one. Lucky you! But, that’s not the only thing worth celebrating, bridging loans are typically arranged quickly and often don’t require much paperwork. Another great benefit of bridging loans is that you don’t have to make monthly interest repayments – the interest is paid back in one go at the end of the loan term, along with the principal amount.
Bridging loans can help in the purchase of personal property or business property. They can also be used by business owners as a quick way to create cash flow into a business. If you are interested in learning more about bridging loans, NSW Mortgage Corp is a wonderful resource because they offer no-obligation consultations that allow you to discover the bridging loan options that are available to you.