Five Benefits of Using a Bridging Loan as a Property Investor

Often, finance can be a huge hindrance to landlords or property – and even more so in this economic climate.

With this in mind, here are some of the many benefits of using a bridging loan for property-related problems:

  1. Allow you to purchase a property before your current home has sold
  • Bridging loans are the perfect solution for those who need to borrow the funds to complete a property purchase before the equity is released from their current home.
  • As they are based on property and one will, therefore, be sold to repay the loan – there is no complex criteria to fill out when applying for a bridging loan – allowing for fast completion.
  • Makes them perfect for purchased repossessed or other time-sensitive transactions.
  1. Funding the refurbishment of a property to increase the sale price, before selling it
  • They can be used to raise funds against the property to fund a full refurbishment, with the loan being repaid once you sell the property for a profit.
  • They’re super-efficient as interest can be rolled-up, meaning that there are no monthly payments to make during the loan term.
  • Instead, it’s all paid back at the end once the property sells.
  1. Ability to grow a property market portfolio faster
  • If you want to buy a property in poor condition for cheap and refurbish it, a bridging loan is an effective way of doing this.
  • Once the refurbishment is complete, the loan can then be refinanced to a mortgage and let with the owner benefitting from higher rental value, and property value.
  • When refinancing, the bridging loan borrower will also be able to borrow based on the higher value and rent figure – meaning they may be able to get all or some of their deposit back to go onto the next property.
  • This makes growing a portfolio much faster and easier to do, as you can recycle the same deposit each time.
  1. Potentially borrow 100% of the purchase price for below-market properties
  • When buying a below-market value, sometimes, you can borrow 100% of the purchase price. However, deals like this are usually hard to find.
  • But ABC Finance’s bridging loan tool allows you to find the best deal, with the highest loan amount instantly.
  • You may even be able to borrow against the value of the property instead of the purchase price, meaning you can put little to no deposit down on a purchase.
  • This also makes it quicker for you build a portfolio.
  1. Allow you to buy property at auction within the allotted time-period
  • Property auction purchases must be completed within 28 days, which isn’t always possible if you’re relying on a mortgage.

However, the average bridging loan taking 3-7 days so you can complete your purchases in a timelier manner.

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