Bridging Loans are becoming increasingly popular for when you need money fast!
Bridging loans are often used in order to buy property at auctions. Buying property at auction is very popular and many people looking to start a property portfolio or expand their existing portfolio buy property this way.
Having made a successful bid at a property auction, in most circumstances a 10% deposit is required immediately and the remaining 90% of the funds need to be paid over within 28 days. Because bridging loans can be arranged quickly it is a popular method of raising money in order to complete the purchase of property that is bought at auction.
Having raised a bridging facility and completed the purchase of the property, the bridging loan will need to be repaid usually within no more than 6 to 12 months. In order to repair the bridging loan the new owner will look to raise a buy to let mortgage, a commercial mortgage facility or sell the property for a quick profit. Quite often the property may require some modernising or renovating before it is sold or re-mortgaged, which is another reason why bridging loans are so popular.
It is important to remember that bridging facilities should only be used as a short term funding solution and before proceeding with a bridging loan you should have a means, or at least a very solid plan, about how you intend to repay any bridging loans.