Balancing loans between selling your existing house and trying to purchase a new one can be a stressful deal. In an ideal situation, people want to pick up the keys to their new house as soon as they settle on the sale of their existing home. The solution if this cannot occur is bridging finance. But, not all people have equal access to this form of financing, and this unequal access is a primary cause of the market disruption. Retirees, self-employed borrowers, and upsizers are a few to name who are still not catered for in this rigid lending system. But if you can get a bridging loan, it will surely help you buy your dream house.
Reasons why bridging loan helps, buy your dream house
Borrowers usually get themselves in a situation where searching for the best short-term business finance lenders is difficult. Many traditional lenders advise the borrowers to extend the settlement period or sell the old house first. But today, the financial market has become exceptionally massive, and finding lenders has become easier than before. The top reasons why a bridging loan is helpful are:
1. Get your dream house before selling your old one.
The concept of purchasing now and paying later with ease has touched the property market as well. If you are into properties, you can use this financing option as unsecured business loans and buy lands before selling out any of your previous ones. It ensures that you do not miss out on a great deal because of the unavailability of funds at the right time.
2. Bridging loans get approved quickly
Speed of approval is one of the biggest appealing points about bridging loans. When you compare them with the traditional form of property mortgage, bridging loans get approved super quickly. The application process gets reduced to a bare minimum. The traditional banking systems have made waiting for a loan approval faster You can, therefore, rely on conventional loans for time-critical purchases like buying a property at an auction. Not just the application process is quick; approval can also happen in a few days.
When you have found your dream house, waiting for a mortgage approval from a bank may mean missing out on an opportunity to live in the home of your dreams. Delays by traditional lenders in loan approvals can set you back by 60 working days. It means that your settlement is at risk, and it may not happen. But when you use this type of financing, you get the funds in your bank in as little time as 48 hours.
3. Downsizing
An attractive fact about the short-term business finance market is the capability of paying off loans right away. It is known as downsizing. This aspect is a huge pain point for the traditional banking systems because homeowners will not have any debt leftover buying property. It makes borrowers less lucrative in this field, where profits come with an interest rate on the loan agreements with long terms. Unlike the mainstream lenders, the bridge loan lenders allow you to pay off straight away, which is useful particularly when downsizing.
4. There is no limit to allocating funds
Another appealing point of a bridge loan is its flexibility. This point is significant to consider when using these funds as unsecured business loans. In the conventional system of loans, lenders are extremely strict about how the borrowers can use the allocated funds. As long as your funding is being used for a business purpose the lenders can assist. You can use the allocated funds for any worthwhile business purpose. Bridging loans can be used to buy a new piece of land, renovate a property, purchase an investment property, and raise business capital. You can use the money for commercial and residential property.
5. Bridging finance has flexible lending criteria
Borrowers can get a bridging loan with no difficulty, irrespective of the size of the loan. The expansion in the financial market has increased the accessibility of this facility. Applicants can still qualify for a competitive loan if they lack proof of income, have a poor credit history, or have a past of insolvency. This flexibility is since these loans are issued exclusively based on security. To be more precise, this short-term business finance gets secured against the value of assets. The lender willingly accepts your assets of sufficient value as security. There are thus no usual obstacles in accessing affordable finance.
6. Use bridge loans to buy all types of properties
You can use bridging loans as a secured loan for people who deal in properties. You can buy any residential or commercial property using the allocated funds. You can also purchase a property at auction or purchase an investment house. Traditional lenders take a long time to approve this type of funding. But with bridging loans, you can buy property or a business premise, renovate it, and then sell off on an improved profit.
Conclusion
Find lenders who have transparency throughout the process. Do some research and go to great lengths to find the best property financing solution, helping you buy your dream house. Competitive bridging loan lenders offer attractive interest rates. Also, the terms of the loans are short, keeping the overall borrowing cost to a minimum.