Trying to sell property so that you can raise money to purchase a new one can be quite a daunting task. This is because it is not easy to dovetail the sale of one property with the purchase of another and there will be a financial gap. This is why most people contact bridge loan lenders when such situations occur.
A bridge loan is another name for short term financing that is designed for real estate financing before long lasting financing is achieved. Commercial real estate enterprise depends on bridging loans to help navigate such financial transactions when cash voids occur. The loans are used to facilitate finances for the temporary shortfall when a purchasing property, undertaking a renovation project or buying a business.
Such leans are secured because of the property and the borrower must have sufficient collateral. Residential properties, auction properties, commercial properties, sites under development, sites that have planning permission, properties that are purchased for letting purposes, retail shops and properties that are overseas can be used as collateral. If you have heavy machinery, equipment that is used in business, or even inventory, these too can be used as collateral.
To take out the bridging loan, you can get a mortgage on the new property and then take out another mortgage on the property that you are selling. The property must first get an appraisal and then the loan is issued on the value of the property but not the property’s purchase price. The term of these types of loans can be one week to six months although the maximum term is two years.
When taking out a bridge loan, you ought to be sure that you can repay the loan within the stipulated term. Most people that look for such times of loans are probably looking for expeditious financial solutions. The advantage of these loans is that you can have them processed inside 24 hours if all your documentation is in order.