Finance

Beginner’s Guide to Bridging Finance – All You Need to Know

Bridging finance is thought to have started back in the 1960s. Today, it has become one of the most expanding and fastest moving sectors, gaining quite an immense popularity over the past few years. Still, the concept of bridging finance can be quite confusing especially for those who try to use it for the first time. Below are some of its basics and some explanation to help those who are in need of an ideal funding option for the short term.

With more and more banks being told to focus on recapitalisation instead of lending money, a lot of property developers and SMEs are faced with the dilemma of how to find an alternative financing route. This is especially true is they are in need of a choice that will allow them to get the finds that they need at a shorter period of time. This is where bridging finance like the one Richard Butler Creagh offers comes in. What used to be a niche industry, it has increasingly become more mainstream.

What it is

Bridging loan or bridging finance is used by people that need to bridge the gap in funds when they are in the process of buying a house and selling a previous property. It may also be used to assist in property purchases at an auction- a process that requires one to process the payment right on the spot.

This type of loan can be quite beneficial to people that need to borrow money and get their hands on the funds fast for a property transaction that is in the interim. It will usually not extend beyond 12 months and it often serves as a cash injection for a specific length of time in which it’s needed.

Why use it

The method used in processing a bridging finance is considerably on the rise. Many are now choosing to take out a bridging loan as well. It offers quite an advantage especially in the sense that it can act as a quick fix. While it is usually utilised for those instances where one is trying to purchase buy-to-let or residential properties, the same methods may also be applied in the purchase of commercial properties.

How it works

There are a number of specialist companies that offer the service in the market today. At the same time, there are also some high credibility lending service providers that offer the service. The good thing about this type of financing is that it can be arranged in just a matter of days. A borrower is also allowed to borrow up to a total of 75% of the total value of a property.

For lenders to approve a bridging loan application, they will be expected to consider affordability first. The loan is not approved based on the income multiples. Lenders, however, will determine first how much can get repaid and whether the interested parties are going to be duly paid as well during the process.

Learn more about bridging finance and the many ways that it can help you by reading about Richard Butler Creagh online.