Find out why a Bridging Loans are perfect for You
Business Bridging Loans works like a short-term loan that can finance a new property before selling your current one. You can also apply for bridging loans to provide funding for your business. The loan term can be 1 – 6 months. In other words, it creates a financial bridge, allowing homeowners to reduce the gap between selling and buying, or help businesses reach a goal.
How do short-term business bridging loans work?
While applying for bridging funds, Instant Business Finance can arrange funding that will allow you to purchase a new home while waiting to sell your current home. The funding can also be arranged to provide cash flow for your business while you wait for your property sale settlement. The total loan borrowed is called the peak debt and includes the loan balance on the existing house, the new home contract purchasing price, purchasing costs such as stamp duty, lenders and legal fees.
You should pay minimum repayments for the bridging finance based on the interest-only amount. In some cases, we capitalize the interest until the borrower has sold the current home, the interest can be added and accrued to the peak debt. After the borrower has sold the property, they will use the total sale proceeds (selling price minus any cost like agent fees) to pay off the peak debt of the bridging loans in Australia.
You can set up bridging finance in Australia using the available equity in your existing home. Bridging finance is a fixed interest rate, you can apply for a business bridging finance with your current home loan in place. You can keep the repayment of each loan separate.
The borrower can get up to 75% short-term bridging finance on the value of the security offered (Loan to value ratio). Instant Business Finance combines the additional capital necessary to assist you in purchasing your next property with the current loan amount outstanding on the existing home to create the best bridging loans in Australia.
Different Bridging Loan Types
The borrowers in Australia have two options for bridging funding. These include:
Open bridging funding
This type of loan does not include any agreed settlement date but general loan terms (usually 6 or 12 months). This loan type can be helpful for someone who has not yet found a buyer for their property. In this case, you might have to submit additional documents to show as proof for short-term bridging loan approval that your property is still available in the market.
Closed Bridging Funding
In this loan, the lender will provide the funding based on the pre-agreed date by which your property will get sold. In this way, the borrower can pay out the principal bridging loans in Australia.
Business Bridging Loans
One of our business bridging loans is perfect if you have sold a business or another asset, but you need access to the funds right now to use for something else. We can lend you the money today, using real estate as security, and you just pay us back when the business or other asset sells.
Reasons for Applying for Business Bridging Finance in Australia
Borrower primarily applies for bridging funding due to below two reasons.
Interest capitalization
If you do not have enough capital to cover the repayments of both properties, bridging funding with an interest capitalization is the best solution. It allows you financial breathing capacity while waiting for your current property sale.
Full loan on the new property
A business bridging finance allows the borrower to apply for the new property purchasing price. It also includes the additional associated cost. It becomes helpful if you have bought a home out of your borrowing capacity but become affordable after selling the current home.
Advantages of a Business Bridging Finance Loan
It is significant to look at the benefits of bridging funds to compare other options before applying for a loan. Let us look at some of the unbelievable advantages of having an instant bridging loan.
Convenience
It helps the borrower to purchase a property instantly without waiting for their current home to sell.
Repayments
Depending on the loan structure, you only have to repay the interest only on the bridging loan along with the payments on your current mortgage until your property sells.
Avoid renting
If the timing is correct with the bridging finance and the purchase or selling of a property, you can avoid the hassle and cost of renting a home during the period. It exists between the settlement of the new home and the selling of the current one.
Eligibility Criteria to Apply for short term bridging finance
There are a few criteria that you have to follow while submitting the online application for an instant bridging loan. Depending on the loan amount and the repayment terms, some eligibility criteria you should follow to qualify for the bridging loan are as follows.
- Maximum loan terms of 12 months
- Maximum LVR applies
- Funds are only applicable for purchasing properties or any business use.
So if you also want the best business bridging loans in Australia on the best terms and conditions, get expert advice from Instant Business Finance. One of our financial specialists will help you with your requirements and give you a clear understanding about the loan.