A Guide To Short Term Bridging Loans in Australia
Maybe you are a business owner, looking for permanent finance, or a person who recently bought a property. Now, before selling your existing property or getting permanent finance, you could have a shortfall and are in need of funds. An option to cover the gap is called a Bridging loan, it uses equity in a property to provide the funding pending sale of another property or even refinance. Bridging loans can be used for both consumer and business purposes.
So, here in this article, we have penned down everything about bridging loans in Australia in detail, such as the type of finance, how it works, and what benefits you get. Go through the article to know more.
Short-term bridging finance – bridges the gap
As we have mentioned earlier, your business can face the need for immediate funding whilst waiting for traditional funding to be put in place. It can also happen between purchasing and selling a property, and a property owner can require urgent funding to secure the next property. Due to these reasons, many Australian private lenders provide funds by way of a short-term bridging loan to connect the gap. Since this type of loan comes with flexible conditions and short loan terms, they are now common in Australia.
These short-term private business loans come with a duration of usually 1 to 12 months. Most lenders are flexible and will structure the loan maturity period at a term that is convenient to you. The loan amount usually depends on the needs of the borrower and the equity available in the property being used as security. A person can apply for a bridging loan online in Australia without stepping out from his home, it is quick and convenient.
We all know, in Australia, how private lenders have simplified the loan application process over the years. Even in the case of a bridging loan, the application process is hassle free with minimal documentation, and quick funding. Since the lenders are aware of the urgency of the borrowers, funding can be available in as little as 24 hours after application and approval.
The perfect circumstances to apply for a short term bridging loan
As countless business loan lenders in Australia come with several finance options, it can be difficult for borrowers to choose the best one to suit their circumstances. So, here we have shared an example of a perfect situation that would suit a short-term bridging loan.
For instance, the existing mortgage over your property is half of the current market value of your property. So, it translates to you having 50% equity in your property. Now, you can use that available equity while purchasing a new house and bridging finance can assist with funding 100% of the purchase price. Once the existing property you own is sold then the bridging finance is repaid.
You can also apply the same formula in your business. For example, your upcoming business finance deal can take a few months, but your company requires funds urgently. In that case, applying for a short-term bridging loan would be a brilliant choice. You can get the fund in as little as 24 hours and utilize the equity available in your property.
Short-term bridging loans come with countless benefits
There are multiple benefits you can get from a short term bridging loan. Here we share only a few of these.
Do not make your dream wait
Maybe you want to purchase a new home before selling the current one. If you have found your dream home, then bridging finance will help you purchase this property whilst you wait for your current home to sell. Why wait when bridging finance is the solution you have been looking for.
Sell your property wisely
Sometimes, property owners sell their property at a lesser price quickly as they need access to funds. Short-term bridging loans can provide funding quickly so that they can wait to sell their property at a better price and not have to rush into a sale at a discounted price.
The loan provide support when needed.
As we mentioned earlier, the short-term bridging loan covers any financial gap. Suppose your company needs quick cash, but a traditional bank loan takes time, a bridging loan can provide the funding quickly to keep your business moving whilst you wait for the traditional funding to be put into place.
The borrower can pay the interest in bulk or in advance.
A borrower takes out short-term bridging loans only in times of emergency. So, often lenders offer flexible loan repayments conditions. The borrower can face some issues during the repayment period and find difficulties paying monthly interest.
So, considering the situation, the lenders capitalise the cost for the term of the loan and a lump sum is repaid at expiry, this frees up cash flow in the business. Once term expires the borrower repays the principal amount plus the interest. On the other hand, the borrower can pay interest only for the term of the loan and then pay the principal amount back with the term expires.
Maybe you are buying a property and waiting for an existing house to sell, or you need immediate cash for your business whilst you wait for traditional bank funding to be put into place, both are equally stressful. Taking out the short-term bridging loan can reduce stress by providing you with immediate funds. In Australia, you will find countless lenders offering loans but always select a lender that suits your needs, consider short-term bridging loan when you need funds today and cannot wait.