Short-Term Finance, or Bridging Finance as it is often called, is an powerful tool in the property investor's financial armoury. It is important the investor understand fully where and how it should be used, and also the costs and legal process involved.
For those investors who need further information, please contact us and we can either send you further information by email, or personally talk you through the whole process.
|Where Can Short-term Funding be Used?|
The property market offers many opportunities to secure a discount from market value
In the last stages before repossession – buying from the owner
After repossession – buying from the mortgagee
An investor equipped and ready to move fast with reliable bridging finance is going to be able to benefit in these situations. Since bridging finance tends to be 'Non-Status' - lenders will consider the type and quality of the property as security for the advance, rather than your income.
Unlike traditional lending, bridging finance underwriters usually set the minimum lending term at anything from 3 to 12 months. There are some lenders who are even more flexible and will lend with no minimum period at all. Lending is generally available at up to 75% loan-to-value (LTV), but in some cases 100% LTV can be made available. Apart from credit checks, the non-status factor is the same as mainstream non-status lending. Bridging financers make lending decisions very fast, and this can give you a huge advantage. The lender will always want to ensure that the interest payment on the amount advanced can be made.
Bridging finance can bridge a gap, but it should not be considered a permanent solution. A long term mortgage may need to be put in place if you intend on keeping the property. That means it is always vital to check your exit strategy and do your due diligence as to the rental and LTV criteria of your future long-term lender. In the case of a more speculative investment the borrower will need to sell the property to make a quick profit.