When it comes to property dreams whether investing in a buy to let, securing your first home or embarking on a joint venture the biggest hurdle to making them a reality begins with an F. Choosing how to finance is complicated and sometimes means missing out on opportunities. Imagine this, you have found a property that ticks all your boxes, the seller needs a fast sale and you are waiting to sell your house. What can you do? Fortunately there is a solution and someone who knows all about it is Declan Ward, founder of The Finance Ward. Declan has years of experience in bridging loans.
Here he talks to us about what you need to know, busts some common myths and reveals how he helps buyers successfully finance their dreams.
What Is A Bridging Loan?
Understanding exactly what a bridging loan is important in determining whether this could be a feasible option for you. Declan breaks it down very simply “A bridging loan is short-term finance, typically lasting 12 to 24 months. It’s designed to move quickly — often completing in weeks rather than months — which makes it ideal when time is critical.” The key word here is time. In many transactions the pressure of time can cause a deal to fall through. Thus, having access to a bridging loan could be the saving grace that gets you to completion. So, if you need to move fast, a bridging loan could be the answer. Furthermore, having an expert like Declan and access to a variety of loans is the key to ensuring you get the right finance for your circumstances.
Who Are Bridging Loans For?
Bridging loans can be used by many different types of buyers who need to move fast. However, “…they’re mainly used by property investors, developers, and business owners…” Declan says. There are lots of situations which make time of the essence where buyers may not have instant access to cash. For example, “…that could be buying at auction, completing a refurbishment, converting a building, or unlocking value from an unmortgageable property…” Declan says. In a nutshell “…they are for people who see opportunity and do not want to lose it waiting on a slow mortgage process.” Applying and securing a mortgage can take months and in some cases, a buyer simply does not have months to wait.
There are many different types of bridging loans that can bridge that gap between opportunity and releasing funds required for its acquisition.
What Are The Biggest Myths About Bridging Loans?
There is a lot of confusion and assumptions about bridging loans that can make them feel intimidating and unattainable. Declan knows this all too well. Part of his role is educating and breaking down the barrier between myths and reality. Here he tells us the biggest three he comes across.
“They’re Only For People In Trouble.”
This is simply “not true” says Declan. “The best investors use bridging as a strategy — not a last resort. It’s a tool for speed and flexibility, not a sign of financial distress.” Understanding how bridging loans work allows property investors and buyers to take advantage of them and forward plans. This allows them to be proactive and seek out opportunities without finance holding them up. Bridging loans are a smart financial tool used by many investors, home-buyers and developers. They understand how they work and have access to an experienced broker. They can prevent trouble as opposed to getting investors out of it and this is where understanding the way they work is key.
“They’re Too Expensive.”
Many write bridging loans off as too expensive. However, as Declan says “ …we’re not comparing apples with apples here…” Yes, they do come with higher interest rates, however, they are only taken out for a short period of time. Furthermore, everything depends on how they are structured. The purpose of a bridging loan is not like a typical mortgage; it allows you to seize an opportunity and move fast. In the long term this can turn out to be more profitable than missing out on an opportunity. “When you’re flipping a property or releasing funds quickly to secure a deal, you need the right tool for the job. The key is structuring it properly from day one and making sure there’s enough margin in the project to absorb the finance cost…” Declan says. In short, in the long term – they more than pay off.
“They’re Hard To Get.”
Depends who you know, right? This often stops people from even making a phone call. As Declan says “with the right broker and a solid exit strategy, they’re actually very accessible.” This is where experience is a dealbreaker, literally. Having a fast-thinking, solution focused broker by your side can connect you to the best bridging loan for your circumstances. Plus, having a legal team like Waterstone Legal who work pro-actively with expert brokers like Declan, ensures legal work is taken care of as quickly and thoroughly as possible. Ultimately – teamwork makes the dreamwork.
The Final Word From Ward
There is a lot of untapped potential with bridging loans due to a lack of information, confusion and unnecessary fear. They are actually an incredibly useful and practical way to finance a purchase and the long term gains can far outweigh the costs. The three biggest myths that they are expensive, inaccessible and only for people in trouble are simply not true. The key is having an experienced broker by your side to navigate a path forward, crunch the numbers and provide the ideal bridge between finance and your goals.
To speak to Declan about bridging loans you can find out how to connect with him on his website. Meanwhile, if you have any legal questions do not hesitate to get in touch. Knowledge is power and our team is always a call away to provide you the answers you need to move forward.
