How Commercial Bridging Finance Sustain Operations
January 1, 2016
In business, space is a crucial element to operations. After all, you cannot hold office, manufacture products or fill up your store shelves in thin air. You need something tangible, one that’s concrete, durable and effective to say the least. However, we all know that purchasing a property isn’t going down an easy-peesy route. In fact, moving and relocating or even opening up a new shop can put a hamper on your operational momentum because it takes time. Luckily, we have something called commercial bridging finance!
What is it exactly? Commercial bridging finance is a type of gap financing arrangement that acts as a stop gap measure wherein the borrower can get access to short term loans to meet its short term liquidity needs. It is names as such because it helps bridge the debt coming due and one’s permanent source of funding.
Still confused? Come up with a list of funding sources that you can use to finance your commercial property acquisition. For sure you’ll have items in the likes of bank loans, mortgages, proceeds from a sale, income and savings to name a few. However, if you take a careful look at all of these you will come to realize that they all take time. All this ‘waiting game’ is what can hurt your operations because it further delays your use of the property and therefore its benefits.
With the aforementioned sources, you need to wait before the resources are pooled or that money is finally released. This can be a problem because getting any real estate investment will come with initial costs which you have to provide for. Examples of these expenses include research costs, surveyor fees, security deposits, down payment, finder’s fee and taxes to name a few. Plus, spotting a great deal is no easy feat. You’ll have to battle it out with the other buyers in the line too. Failure to come up with the money for these needs can hinder an acquisition. This hurts operations again as it further delays the purchase and use of the asset.
All of these risks are negated by commercial bridging finance as it provides for all such short term needs. What makes it even better is that it can be easily closed out before or at maturity once your permanent financing has finally come through. Because it aids in the successful acquisition, it is able to help sustain operations and prevent any delays and hiccups. In business, time is of the essence. It’s pretty much golden.
Learn more about bridging finance here alternativebridging.co.uk.
How Repayments of Property Bridging Loans Work
October 27, 2015
Repayments of property bridging finance are one of the many reasons that add up to its charm. This interim financing method is already beneficial in a myriad of ways and helps buyers, both individuals and organizations, to make better, effective and timely real estate asset acquisitions.
Property bridging loan is first and foremost a stop gap measure allowing the connection between an obligation coming due and a yet to be available permanent source of funds. It works to provide for short-term funds in times of short-term liquidity needs. This can happen a lot in many asset purchases because most individuals and organization use funds that need the accumulation of time.
Take for example bank loans and mortgages. We all know that although they provide for your needs, it can take a significantly long period of time to cover for its application and approval often requiring you to wait from weeks to months. The proceeds from a sale of an old property, salary and income will need some waiting too.
Because of all this “waiting game”, buyers are put to a certain disadvantage especially when they’ve already found the asset they wish to acquire. Remember that to close a contract and take hold of the right to buy the asset, one must first be able to provide for a security deposit and a down payment. Let’s not forget about all the other expenditures necessary to find the property.
When permanent financing is not yet available, buyers can make use of property bridging finance to avoid risking any opportunity losses. It can also be seen as a cost cut for those who will have to sell the asset they are currently using to acquire the new one since they won’t have to rent as they move out and wait for a buyer.
Now as far as payment goes, property bridging loan has a huge advantage because it allows for flexibility and liberty.
Providers like alternativebridging.co.uk, allow the repayments of property bridging finance to happen on or before the maturity date. Borrowers may opt to close and pay it out early on as they are capable of doing so and as they deem fit. At the same time, they may also opt to wait for the maturity date which is the time where the permanent source of finance comes through. Because of this flexibility, this interim financing method does not add to the burden of obligations but rather aid buyers in their endeavors.
What a Family Benefits from Alternative Property Finance
August 4, 2015
Many families and home buyers make use of what we call bridging loans or alternative property finance in the purchase of their desired residential properties and investments. It is one of those forms of credit that people are likely to tell you about when you wish to get a house, an apartment or a condo unit. But then again, many are still confused as to what they can actually do, what their very purpose is and how they can help. Allow us to answer those queries for you.
First of all, a bridging loan pertains to a sum of money lent by a financial institution to cover an interval between two transactions. This is why it has been referred to as a stop gap measure and an interim financing method. It provides for the home buyer’s short term and immediate needs (e.g. down payment, initial installments, agent costs, etc.) at that certain point in time where permanent funding sources have not yet been made available, as is the case with waiting for a bank loan and mortgage to be approved or waiting for an old house to be sold.
Families can therefore benefit from alternative property finance in the following areas.
- First of all and as mentioned earlier, they are short term in nature and would therefore not be a stressful burden for families seeking out a home. The bridge shall only be used at a specific point in time, often mere months, and does not double up as a second form of debt. Additionally, they are easily closed and repaid. Home buyers may pay it out even before maturity should they be able to do so or upon the arrival of their permanent source of funds.
- Second, they help families cut back on costs. Most if not all properties tend to cost more tomorrow than today. This is oftentimes due to the continued appraisal of lands and the development of communities, establishments and infrastructures that give way to appreciation in value. In other words, buying a home today costs less than doing so in the future.
- Third, there are many buyers out there so you have to keep competition in mind. A really great home will not stay in the market for long. Someone can snatch it up if you fail to get it on time. Bridging loans help prevent that.
- Lastly, bridging loans help families save on their rent. Many families who sell their old houses to use its proceeds to fund for their new one will often have to move out and rent a place while awaiting a buyer. This contributes to more expenses. By using the bridge to close the deal on the property, families can skip the rental and immediately move in while waiting for the old property to be sold.
Learn more on alternative property finance at this site alternativebridging.co.uk.