If you intend to sell your old home and use the money to purchase the next one, you may face a few challenges along the way; from real estate price fluctuations, slow auction clearance, uncertain real estate market climate, among other factors. You might end up losing your dream house while waiting for the house to sell.
If you’ve got no other financial options, then you might want to consider Bridging Finance.
What is Bridging Finance?
Bridging finance is basically a short-term loan (usually 12 months or less) that serves as a “bridge” to enable homeowners or business owners to purchase a new home or property before the existing one gets a buyer. In other words, the funds are used by property buyers to bridge the gap between the sale of their existing property and the completion date of the purchase of their next property.
The loan can also be used as a short-term loan to buy off property at an auction, where you will need urgent funds but may have not yet sold your property.
Types of Bridging Loans
There are several types of bridging loans available. You can choose one depending on your specific needs. These loans include;
• Bridging Finance for Property Auction
If looking to purchase a new property at an auction but your existing property has not yet sold, a bridging loan for property auction is what you need.
Obtaining bridging finance can allow you to pay the initial deposit (which is usually a certain percentage of the actual property value) as soon as the hammer comes down, and then complete the payments in the exact time stated on the auction contract.
• Renovation and Development Bridging Loans
If you are planning to renovate a property or develop a piece of land into a residential or commercial property but are short of funds, you should consider obtaining a bridging loan.
Once the renovations and land developments are complete, you can now repay the short-term loan as agreed on the contract.
• Open and Closed Bridging Loans
In closed bridge loans, the borrower has a set date on which the loan will be repaid. It’s suitable for a borrower with a clear repayment strategy. For example, the perfect situation is when the borrower has already signed a contract to sell a property and the completion date has been set or is fixed. Upon the sale of the property, the money will be used to repay the loan.
The Bridging Loan Process
No matter what type of bridging loan you want, the process is the same. It’s important that you familiarise yourself with the process.
Step 1: The borrower provides the lender with a summary of the deal, main reasons for wanting a bridging loan, the security available, and a clear repayment strategy.
Step 2: The borrower presents evidence (if applicable) of the new property purchase to the lender and proof of the exact price to be paid
Step 3: The lender issues the borrower an offer letter stating the terms of the proposed bridging finance and what is required to obtain the loan.
Step 4: The lender makes an accurate valuation of the value of the property to assess loan terms and amount.
Step 5: The borrower signs all the required documentation
Step 6: The bridging funds are sent to the borrower through their preferred payment channel
In most cases, the process takes around 2 to 15 days at TIC Finance. However, depending on your case and the set of circumstances involved, this may vary.
Common Reasons Why People Need Bridging Loans
Some years ago, bridging finance was not as popular as it is now, especially after banking deregulation. Before then, it was perceived as high risk, and the interest rates were very high. Currently, bridging finance has increased in popularity and individuals and small businesses are taking advantage of the many benefits these loans offer.
An increased number of individuals and business are now using taking advantage of the availability of short-term bridging loans due to the short-term financing solution and flexibility they provide.
Because the loan is secured against a property at TIC Finance, we don’t need to check your credit history and having a bad credit rating is okay.
The loans are helpful in various circumstances, including quickly securing property while still waiting to sell an existing one, building homes or other property, temporary cash flow cover, buying property at a discount, auction property sales, property renovations and developments, un-mortgaged properties, and quick access to funds for business people. At TIC Finance we don’t mind what you need the money for, out helpful staff will help you secure a loan fast.
Unmortgaged properties – investors looking to purchase properties that cannot have a standard or rather normal mortgage secured on them until corrective work is completed can immensely benefit from bridging loans. This may include property without a kitchen, bathroom, old floors, walls etc. or property that needs doing up for some other reason.
Renovating properties increases their market value which as a result enables the investors to sell them for a profit. That way, they are able to repay the bridging loans as scheduled and also increase their chances of securing long-term finances.
Another reason why people are obtaining bridging loans is because of the high-interest rates. The bridging loans interest rates are much higher compared to other loans. Therefore, people only use them in circumstances where short-term finance is required (usually 12 months or less).
How Can TIC Finance Help You with Bridging Finance?
Bridging finance is a short-term loan that serves to “bridge” a gap in available finance/equity. TIC Finance Ltd. usually offers loans between 2-12 months, but these loan terms could be extended up to 2 years. Our lending facilities are affordable and more reasonable than many of its competitors in the finance market. Funding can be arranged as little as 48hours, even if your credit history is not that great. TIC Finance Ltd. secures funds on the equity of your property. The Bridging facility that our company offers is a flexible option and a fast way to be able to achieve maximum funds and stop repossession in a heartbeat.
Bridging loans can also be used for various other reasons, some examples being property renovation, releasing funds for personal matters or maybe just investing money into a business. No matter what reason for the loan, bridging offers a wide range of financial solutions for both business and personal. Our bespoke approach allows us to match your circumstances and lend funds by adapting to your lifestyle.
TIC Finance can help you just simply.
Call us on 020 3411 4451
TIC Finance Ltd. – Bridging Loan Process
No matter what type of bridging loan you want, the process is simple as:
- The Client would provide TIC Finance Ltd. with property information such as Redemption Statement, information on charges, any arrears outstanding on property/properties owned and reasons for needing a bridging loan. In return not only will TIC Finance provide the client with quick and confidential advice it will also provide an affordable Bridging offer.
- As both parties are satisfied with terms and conditions this is when TIC Finance Ltd. will put an offer on the table, as long as there is sufficient equity to secure our loan.
- Following the loan agreement, TIC Finance Ltd. can then swiftly proceed with the legal paperwork, documentation and have funds transferred over within 48 hours to your appointed solicitors.
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