Bridging Finance. You may have heard of it, but do you know when it’s useful?

Bridging finance can be a valuable tool in various situations, especially in Australia’s dynamic property and business markets.

Here are some of the best uses for bridging finance:

Residential Property

If you find a new property to buy before selling your old one and you want to purchase but haven’t yet sold your current home. The solution for you is bridging finance. It can provide you with the necessary funds to cover the gap. It’s particularly useful in competitive markets where timing is critical.

OR you may require bridging finance for renovation financing: When you need to renovate a property before selling or refinancing it, bridging finance can cover the renovation costs while you wait for the sale or revaluation of the property.

Business Operations

Cash Flow Management: If you own a business, bridging finance can help manage cash flow gaps, ensuring smooth operations while waiting for expected payments or revenue to come through.

Seizing Opportunities: If you encounter a business opportunity or a contract that requires immediate investment, bridging finance can provide you quick access to funds. It enables you to take advantage of time-sensitive deals or expand operations.

Refinancing

Short-Term Financing: Bridging finance can be used to temporarily bridge the gap when you are refinancing existing loans or consolidating your debt. This is especially helpful if the refinancing process is delayed or if there are unexpected expenses. It can save on unnecessary stress of unforeseen delays with the refinancing process.

Property Development

Development Projects: If you are a developer and need quick capital to get a project started or to cover costs before longer-term financing is arranged, bridging finance can provide you with the necessary funds to begin construction or complete phases of development preventing any delays.

Investment Opportunities

Quick Acquisitions: Investors can use bridging finance to quickly acquire properties or assets before securing longer-term financing, making it possible to act swiftly in competitive markets.

Considerations when considering bridging finance:

Interest Rates and Fees:

Bridging loans often come with higher interest rates and fees compared to traditional loans. Make sure the cost of the finance is justified by the benefits.

Repayment Terms:

These loans are usually short-term, so it’s crucial to have a clear plan for repayment and ensure that you can meet the terms within the specified timeframe.

Exit Strategy:

Have a solid exit strategy to either sell the property or secure long-term financing before the bridging loan term ends.

Using bridging finance effectively requires careful planning and consideration of the associated costs and terms. When used strategically, it can provide significant advantages in both property and business contexts.

Engaging an experienced Finance Broker can assist with guiding you through this process to select the finance products most suitable to you, while ensuring your needs and goals are the focus. Call our local Finance Brokers here on the Central Coast: 1300 141 453