There are many different types of financial transactions and negotiation methods when real estate is involved, and some of them can be quite confusing. While standard domestic mortgages are confusing enough, those seeking to purchase property internationally or otherwise engage in real estate investing encounter an entirely different set of complexities.
Sometimes, property owners must transition from one property to another. In other cases, short-term projects need to be completed when there are no immediate assets in order to do so. This can be an incredibly stressful experience, but one service can help minimise the anxiety associated with doing so. Known as bridging finance services, this process can be helpful in a variety of ways.
Here is what you need to know about bridging finance services and how they work.
What Is Bridging Finance?
The easiest way to think about bridging finance is to imagine a short-term mortgage. For individuals in need of short-term financing, this service offers a lifeline based on ownership of an existing property.
A common reason for bridging finance for residential owners is the need to secure funding to purchase a new residence before the sale of their previous residence. For example, if you were looking at buying a property in Bath with bridging finance, or anywhere else, this would enable you to do so before the sale of your existing home has been finalised. This is a beneficial move to make if you would prefer to buy before you sell, meaning you don’t have the profit from the sale to apply to your new home’s down payment. Additionally, bridging finance can be especially useful when seeking to purchase a new property internationally.
Bridging finance experts such as Enness offer international assistance for those seeking to obtain short-term funding. Offering bridging finance solutions for virtually any and all legal needs, their services allow property owners to obtain quick liquidity for international home purchases, renovate or develop existing properties or complete time-sensitive projects.
How Can Bridging Finance Be Accessed?
Generally, the easiest way to access bridging finance is to consult with a mortgage brokerage service. It is important to point out once again that this form of financing is possible due to existing ownership of property. Those who don’t own property cannot utilise bridging finance as there is nothing through which to secure this short-term mortgage.
For both domestic and international financing needs, bridging finance can be easily accessed with existing property that secures the mortgage. However, bridge loans require equity in the property that’s securing the loan.
What Types of Bridging Finance Exist?
Several types of bridging finance can be utilised depending on the individual’s exact needs.
Auction financing is one example. In cases where individuals want to purchase an item via auction but don’t have the liquidity, this is a viable option.
International financing is another common type of bridging financing. This is utilised – as the name suggests – when properties or renovations are desired across international boundaries.
High-value financing and commercial financing are two other examples, which relate to the financing of particularly expensive properties or projects, and commercially-relevant endeavours.
How Long Can Bridging Finance Services Be Used for?
Generally speaking, there is some flexibility with bridging finance terms. These short-term mortgages are designed to be repaid within a period ranging from a few weeks to a few years. A variety of factors will impact how long this particular form of mortgage is granted for – most will fall in between one month and one year. However, customised solutions are commonly provided by brokers when special situations exist.
Bridging finance services are complex yet simple financial solutions that make it possible to access liquidity in situations where assets are otherwise tied up in property or other assets. Whether it is buying property or renovating existing structures, bridging finance may be a useful solution for your particular needs.
