Recent years have brought about an enormous surge in the popularity of bridging finance in the UK.
Across private and business borrowing circles alike, bridging finance has become the financial product of choice for millions. Particularly when time is a factor, bridging finance can be an absolute godsend.
But how long (realistically) does it take to arrange a bridging finance deal? Assuming you were to submit an application today, how quickly could you expect to get your hands on the money?
The short answer – it depends on the size, nature and general circumstances of the loan. Bridging finance in general can be far quicker and easier to arrange than a traditional loan or mortgage, but it’s still wise to consider applying as early as possible in time-critical situations.
Detailed below are a couple of figurative bridging loan example which illustrate how long you can expect to wait to access the money you need:
Bridging Loan Example 1. Downsizing for Retirement
In this example, let’s say a couple upon reaching retirement has decided to downsize their property to free up some extra cash. They also want to move closer to their family and no longer need such a large home. They’ve found the perfect property in the perfect location, but their current home hasn’t yet been sold.
In order to avoid missing out on their dream property, they decide to apply for a bridging loan to cover the gap between the purchase and the sale of their current home.
As the value of their current home significantly exceeds that of the property they intend to purchase, a bridging loan can be secured against it accordingly. Without having to wait for their current property to be sold, the couple is provided with the money needed to buy their new home and ‘bridge’ the financial gap.
The total time from application submission to receiving the funds required being approximately three to five working days.
Bridging Loan Example 2: Buying an Investment Property
An individual wishes to invest in a second home as an investment, though doesn’t currently have the funds available to cover the purchase. Instead, they’re in the process of selling other assets, which when the sale closes will produce more than enough money to cover the costs of the investment property.
In this instance, qualifying for a bridging loan may entail an official valuation of both assets, in order to determine the borrower’s eligibility and exit strategy. All such work can be carried out within 24 hours, with the subsequent loan being provided within as little as three working days.
Bridging Loan Example 3: Purchasing a Property at Auction
If your dream property was to come up at auction, a bridging loan could provide the fast-access funds needed to buy it outright.
In a typical scenario, the sale of your existing property was near guaranteed, only for the prospective buyer to pull out at the last moment. In doing so, you lack the funds needed to pay for the property and your current home remains on the market.
Just as long as the value of your current home is sufficient to cover the cost of a bridging loan, you could be issued the funds you need in no more than five working days. Given that your home is already on the market, it will most likely have been recently assessed and valued formally. Hence, further valuation and inspection requirements may not be necessary.
The receipt of the funds needed to pay for the property at auction could take less than a week from the time of application, providing you with the opportunity to buy your dream home at an unbeatable price. The bridging loan and all borrowing costs being repaid in full at the time the sale closes on your current/previous home.
Article by iConquer