How can Bridging Finance help a First-time Buyer?

Buying a house for the first time isn’t that bad. As long as you have the money, you can buy any property you want. However, the biggest hurdle that comes your way is the money. 

Quite frequently, most first-time buyers don’t have the funds to purchase the property of their choice. That’s where bridging finance comes in. 

Most borrowers think it’s hard to get a bridging loan for a property purchase if they buy for the first time in their life.

We have addressed this elephant in the room to relieve you of any doubts as a property buyer. Moreover, this article explains the process of getting a bridging loan. 

What are Bridging Loans for the First-time Buyer?

In the realm of finance and particularly bridging loans, lending experience matters alot. You have the yardstick to deal with every financial event as it helps you set things on the right track. 

Moreover, lenders prefer those with exposure to lending and credit handling. Nevertheless, that doesn’t mean first-time buyers can’t enroll for bridging loans.

A bridging loan provides short-term finance to borrowers who want to bridge money gaps. Often people use these loans to buy a property. Generally, you can use these loans to fund projects other than the property sector. 

The buyer who wants money to buy a house for the first time must know that bridging loans demands collateral. That means you must own some property asset. 

It can be a share in an estate or a house your parents give you in inheritance. Moreover, you may have other commercial property assets you don’t buy from your money as your assets. 

If you have such kind of asset, then bridging loans are very easy to get because bridge financing is based on secured loans. 

How do Bridging Loans facilitate First-time buyers?

There are different reasons to get a loan. Bridging loans are designed to get instant finance for property projects. 

You might have various reasons to get a loan. To find how bridging finance helps you, look at these scenarios:

1. To buy a property at auction.

2. To purchase an uninhabitable property.

3. To refurbish or renovate a house.

4. Convert a property from residential to commercial.

5. Buy-to-let property projects.

6. Avoid costs on your mortgages.

It shows that bridging finance helps you in various avenues of property projects. Thus, if you haven’t dealt with these loans before, we have shown some plus points for first-time buyers.

First of all, these loans are repaid in full, so you may be free from the clutches of monthly repayments you must do in the case of mortgages. 

The interest rate is higher than mortgages, but the repayment terms only prolong to a 1 or 2-year maximum. So, the overall interest rate isn’t that bitter pill you must swallow for many years. 

How do the Lenders see your Loan Application?

Three things govern how your lending application is checked and evaluated:

1. The security you provide to get a loan.

2. You need to disclose the exit strategy.

3. You should have a good credit history.

Let’s discuss all in detail below:

Security:

The property you want to purchase for the first time must have some value in terms of money. The lender agrees to fund that value if you place any collateral for the loan. 

That collateral can be any property. Once you have committed that security, you no longer have the right to sell that property, which acts as a guarantee for the lender. 

If you can’t repay the loan, the lender reserves the right to confiscate your property and sell it to recover their money. 

Good Credit History:

Lenders want proof of loan repayments, whether they are specialized firms or P2P lending platforms. If you have defaulted or grappled with repayments in the past, you may need help to get a bridging loan. 

Therefore the lender takes it seriously to check your financial status. They may evaluate your credit score or perform stringent checks to evaluate your performance. 

Based on the available data that can forecast your ability to repay loans. The whole process signifies whether they have good loans or bad ones. 

Exit Plan:

The exit plan is the logical and viable way through which you may repay the money to the lender. The lender wants to know how you would come out of the loan. 

Therefore, you have to assess your ability to perform repayments. That’s why you must have a suitable plan to execute the repayments. 

You may decide to buy to let the property repay loans. Else, you may decide to get a mortgage on the property to manage the repayments.

Final Words:

Bridging finance helps you get an instant sum of money by securing a property. You can still get an a bridging loan even if you are a first-time buyer. 

Unlike mortgages, you don’t have to go through the hard process of approving a bridging loan. It’s fairly simple and easy for you to have if you have a property as security. 

Moreover, if you perform all the mentioned details, you may get the loan as easily as possible. This article may find some important details you must know as a first-time home buyer. 

We hope after reading this article, you will get all your doubts cleared easily. If you still have any questions in your mind, feel free to give your feedback in the comments.

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