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Bridge Loans & Commercial Finance
A bridge loan is a short-term loan that is used to bridge the gap between two transactions. Typically, bridge loans are used when you need to purchase a new property before selling an existing one, and need funds to cover the down payment and closing costs on the new property.
Bridge loans are usually secured against either your existing property or the property you wish to purchase, and the loan amount is based on the value of the property rather than your creditworthiness or income. The loan term is typically between 6 and 12 months, but it can vary depending on the lender and your circumstances.
When would I need a bridge loan?
You might need a bridge loan when you are in a situation where you need to purchase a new property before selling an existing one, but you do not have enough funds available to make the purchase.
Here are some common scenarios where a bridge loan may be necessary:
1
Buying a new Home before Selling your Current one
If you have found a new home that you want to buy, but have not yet sold your current home, a bridge loan can help you finance the down payment and closing costs on the new home.
2
Property Development
If you are a property developer, a bridge loan can help you finance the purchase of a property that you plan to renovate or develop.
3
Auction Purchases
If you plan to buy a property at auction, a bridge loan can provide you with the funds you need to make the purchase, as auction sales typically require payment within a short timeframe.
4
Buying a Property in a Chain
If you are part of a property chain and need to complete a purchase before the sale of your current property is finalized, a bridge loan can help you bridge the gap in financing.
What is commercial finance or a commercial mortgage?
A commercial mortgage is a type of loan that is secured by a commercial property. Commercial properties include office buildings, retail spaces, warehouses, factories, and other properties that are used for business purposes.
Commercial mortgages are usually used to finance the purchase or refinancing of commercial properties. The loan terms and interest rates for commercial mortgages are typically higher than for residential mortgages, reflecting the increased risk of lending to businesses.
Commercial mortgages are often structured differently than residential mortgages. The loan term is typically shorter, typically between 5 and 25 years, and the loan-to-value ratio is often lower, which means that the lender will only provide a loan for a portion of the property's value.
Repayments on commercial mortgages are often structured to reflect the cash flow of the business, with some repayment options including interest-only payments or balloon payments. The interest rate on a commercial mortgage can be fixed or variable, and may be influenced by factors such as your creditworthiness, the property's value, and the overall health of the economy.
What security do lenders need for commercial mortgages?
Lenders typically require security for a commercial mortgage, which is usually the property being purchased or an existing property owned by you. The property is used as collateral to secure the loan, which means that if the borrower defaults on the loan, the lender has the right to take possession of the property and sell it to recover the outstanding debt. The lender may also require a personal guarantee from you or a charge over your assets in addition to the property.
What is the minimum deposit required for a commercial mortgage ?
Depending on the type of commercial minimum deposits are usually anywhere from 25% - 40% deposit requirement.
How can we assist you with obtaining a bridge loan or commercial mortgage that is in your best interests?
At Your Best Interests, our expert advisors can provide assistance with obtaining a bridge loan or commercial mortgage. We will assist you in navigating the process, identifying the most appropriate lender, and negotiating on your behalf. Our team will provide you with comprehensive information on the various options available to you and assist you in selecting the most suitable one for your unique requirements. We will handle your application, liaise with lenders and solicitors, and address any questions or concerns you may have along the way. Our primary objective is to ensure that you secure the most favorable terms possible and that your application is approved.