When you are a real estate investor, you will know how fast an opportunity comes and goes. In such situations, having the right financing option at hand can make a huge difference. But it is not always possible to be ready with cash in hand. This is why investors look for short-term financing options like bridge loans. It offers them a valuable resource to fulfil their financial needs at the time. Now, if you are in need of funds, you can read ahead and learn about the eligibility criteria for bridge loans. It will clear your mind and keep you prepared for the future requirements.
When should you consider getting a bridge loan?
A bridge loan financing can be helpful for you in a lot of scenarios. Now, when you require immediate financing, it can be a practical solution. Here are some of the common situations when you might need help.
- Quick decisions
If you are in real estate, you will find opportunities that require you to respond quickly. Here, this includes time-limited sales or distressed properties. So, having a bridge loan here can help you a lot. Investors can take advantage of these options easily without waiting for a longer approval process for loans. As bridge loans are quite fast, you can get the loan within a day or 2.
- Auction purchase
If you participate in property auctions, you will need immediate financing to secure the winning bid. Here, a bridge loan will help you get the necessary funds quickly. So you will have the freedom to participate in competitive auctions without worrying about finances.
- Cash offers
When you give out cash offers in real estate, you can have a great competitive advantage. Here, when you provide a quick cash offer on a desirable property, the bridge loan will help you complete the deal as soon as possible. So, maximising returns from your investment is now a lot easier.
- Simultaneous buy and sell transactions
A popular bridge loan scenario you might have heard of is when you purchase a new property and are waiting to sell your current investments m. In such cases, you can use a bridge loan to get the time you need to get the proceeds from the sale. Now, once the sale is complete, you can repay the bridge loan with the profits.
What are the eligibility criteria for bridge loans?
Now, if you are thinking a bridge loan makes sense for you, then let’s discuss the eligibility criteria for the same. While bridging loans in London are all the same, the requirements of lenders can vary greatly. So here’s what you can expect.
- You will be able to get bridge loans for refinancing, purchase, or cash-out refinance investment options only.
- You can find bridge loans with a term length of 12 to 24 months.
- You need to have a minimum credit score of 660 to get the bridge loans.
- You can acquire financing up to $1,00,000 to $2,500,000.
- Here, you can avail of a loan to purchase value of up to 75%
- Payment options are only for monthly payments. You will get no prepayment penalty.
- The refinance loan-to-value ratio can be up to 75%
- In case of cash-out refinance, you can get up to 65%
- Bridge loans are preferable for single-family, duplex, multifamily with five plus units, triplexes and townhomes.
When you fulfil all the criteria, you can easily close the deal within 3 to 5 days. This will help you get the financing fast and close your investment deals.
How are bridge loans different from other types of hard money loans?
You might have heard that bridge loans are the most common type of hard money loans, but there are other varieties as well. This includes DSCR loans, fix and flip loans and ground-up construction loans. However, it is safe to say that bridge loans are the best option for purchasing rent-ready homes. Now, if you are looking to finance a property that needs renovation before selling or renting, then a fix-and-flip loan can be a suitable option.
Here, both construction and fix and flip loans are short-term solutions that allow you to renovate, purchase or build a new property. Once you complete your main aim of renovation, purchase or building, you can easily convert the loan to a long-term fixed DSCR loan, which is suitable for rental properties.
Conclusion
If you are ready to get bridging loans in London, then you can consider connecting with Bridge Loan Direct for the right support. You cannot find anyone better in the industry. They can provide you with timely assistance. Now, based on your requirements, their professionals will guide you well. they will help you choose the loan that best suits you. They can provide you with a lower interest rate and a suitable repayment option. So make sure you connect with them to enquire about the loan choices and see how they can help you.