Bridging loans for land purchases

Friday, 02 September 2011 09:41

Buying land? Consider a bridging loan

Buying land? Consider a bridging loan

Bridging loans can be an excellent way of securing additional funding, with borrowers able to access cash both swiftly and efficiently using such an arrangement.

This can be especially useful for people operating in the property market, particularly developers who are hoping to purchase land for residential or commercial purposes.

If you are interesting in pursuing such an arrangement, you can secure up to £250,000, which can be paid back over a period of up to 12 months, although typical agreements last for between one and six months due to the high interest rates.

Whether you are an individual, small or large-sized company, you will be able to use this cash to snap up any discounted land parcels that you are hoping to build upon.

This means bridging loans are suitable for all kinds of projects, from a high-end urban initiative to a self-build structure, enabling you to move quickly should you come across a piece of land that is perfect for your needs.

Whatever your requirements, it is important to speak to a bridging loans expert in order to receive advice on your application.

This way, you can rest assured you are making the right decisions and you can assess bridging loan rates to ascertain whether it is the correct option for you.

Specialist advisers can help you to put together a repayment structure that will give you time to purchase the land, build on it and then begin renting it out.

Securing a bridging loan also allows you to funnel your existing funds into the construction work, rather than worrying about how you will be able to afford the plot on which it is based.

Once you have completed the development, you can then take out a regular mortgage in order to pay off the bridging loan, with many providers offering an additional service to help you find the best deals for your circumstances.

Thinking about committing to this form of borrowing? Make sure you use a bridging loan calculator to see what your repayments may be each month.

Simply input the amount you require from the lender, as well as the interest rate, and you will be given an estimate on how much you will be charged.

This enables you to experiment with different figures in order to correctly judge what amount you will be able to afford during the course of the loan.

Interest rates can begin at 1.5 per cent and there may be a range of flexible repayment plans, so you might be able to clear the debt earlier than originally arranged or receive deferrals and payment holidays if you are struggling.

Depending on your agreement, you may need to meet certain specifications regarding planning permission, so make sure to check the small print in the terms and conditions.

However, land purchases are not the only area of the market in which bridging loans can prove useful.

Many people use this line of credit when buying properties at auctions, enabling them to snap up discounted lots for a price that may be outside of their immediate finances.

Therefore, individuals can take out a bridging loan to cover the cost of the house, before selling it on and using the revenue to cover the loan and interest.

They are also commonly used to bridge the gap in money when purchasing a new home, particularly if the old one is yet to be sold. 

 

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