Unravelling Open Bridging Finance: A Comprehensive Guide

By: Aaron Robbins0 comments

Whether buying a new property, renovating an existing one, or selling your home, sometimes you need immediate funds while awaiting the sale or settlement of another property. This is where bridging finance comes into play, providing a short-term solution to bridge the financial gap.

In Australia, one popular option is open bridging finance. Keep reading as we unravel open bridging finance so that you can better understand the ins and outs of open bridging loans.

How does a bridging loan work?

Open bridging finance is a short-term loan that allows borrowers to access funds for a new property purchase while awaiting the sale or settlement of an existing property. Unlike closed bridging finance, which has a fixed repayment date, open bridging finance offers more flexibility by not imposing a specific exit strategy. This means borrowers have the freedom to repay the loan as soon as they sell their existing property or find an alternative source of long-term financing.

Flexibility

The open nature of this financing option may enable borrowers to adapt to changing circumstances. If a property sale falls through or the settlement is delayed, borrowers may be able to continue utilising the bridging loan until they secure an alternative solution. This flexibility ensures that the purchase of the new property can proceed smoothly, reducing stress and avoiding potential losses.

Access to capital

Open bridging finance provides borrowers with the means to seize investment opportunities without waiting for the sale of their current property. It enables quick access to funds, allowing borrowers to make time-sensitive property purchases or renovations.

Streamlined application process

Lenders offering open bridging finance understand the urgency involved in such transactions. Therefore, the application and approval process is designed to be swift and efficient. Borrowers can expect a faster turnaround time, ensuring they can take advantage of opportunities promptly.

Bridging period

Open bridging finance offers a more extended bridging period than closed bridging finance. This longer duration gives borrowers increased flexibility and peace of mind, knowing they have ample time to finalise the sale or settlement of their existing property.

Competitive interest rates

As with any financial product, the interest costs vary depending on the lender and borrower’s circumstances. However, open bridging finance typically offers competitive interest rates, making it an attractive option for borrowers seeking short-term funding.

What can I use an open bridging loan for?

Open bridging finance is well-suited for a range of different property funding needs:

  1. Property purchases:When you find your dream home but are yet to sell your existing property, open bridging finance allows you to secure the new property without delay. It provides the necessary funds for the purchase, and repayment can occur once the existing property is sold. This removes the need for securing a rental property to live in.
  2. Renovations: Homeowners looking to renovate or upgrade their property can use open bridging finance to fund the project. The borrowed funds facilitate the renovation work, and repayment can be made when the property is sold or refinanced.
  3. Property development: Developers often require short-term financing to acquire and develop land before selling the completed project. Open bridging finance may enable them to access capital quickly, ensuring a smooth development progression.

Does Diverse Funding Solutions offer open bridging loans?

Diverse Funding Solutions offers fast bridging loans that benefit business owners seeking swift financial solutions. Our efficient process and cost-effective structure enable you to acquire the necessary capital to expedite property transactions like never before.

Flexible terms with competitive interest rates

We provide flexible repayment terms and competitive interest rates, ensuring affordability. Leveraging our extensive expertise in the finance industry, we strive to source the most favourable deal for you. With access to a vast network of over 200 lenders and a straightforward application process, you can swiftly progress with your project without enduring weeks or months of waiting.

Swift approvals

Our bridging loans from Diverse Funding Solutions come with rapid approval times thanks to our efficient team and straightforward application process. Our experts are committed to ensuring a smooth and expedited experience, facilitating prompt access to the capital you require. We guide you throughout the process, from pre-approval to closing, to ensure you secure the financing you need without unnecessary hassle or complications.

potentially Simpler than dealing with banks

In addition to their expeditious nature, Diverse Funding Solutions’ fast bridging loans offer the advantage of being generally easier to manage than traditional bank loans. We understand that banks can sometimes be slow to respond or burden you with extensive paperwork. Therefore, we have streamlined our process, minimising unnecessary hoops to jump through.

At Diverse Funding Solutions, we remain dedicated to providing swift bridging loan solutions that offer our customers the flexibility and security they require to progress rapidly and affordably with their projects. Our competitive rates and flexible repayment terms enable you to access the necessary capital without undue trouble or stress.

Talk to the team today to find out how we can help you bridge the gap between property purchases!

Commonly asked questions about an open bridging loan

What is the maximum loan term for an open bridging loan?

The bridging loan period is typically short, usually ranging from a few weeks to a few months. It depends on the expected timeframe for the sale of your existing property and the lender’s conditions.

How much can I borrow with open bridging finance?

The amount you can borrow depends on various factors, such as the value of your existing property, the purchase price of the new property, and your financial circumstances. Typically, lenders offer bridging finance that covers a percentage of the anticipated equity in your existing property.

What are the interest rates for open bridging finance?

Interest rates for open bridging finance can vary depending on the lender, loan amount, loan term, and your financial profile. Generally, bridging finance rates are higher than standard home loan rates, as they are considered higher risk due to the temporary nature of the loan.

Do I pay principal and interest repayments on my bridging finance loan?

Most open bridging loans are essentially paid via interest-only repayments until the maturity date or when the existing home is sold. The peak debt amount is the amount of the existing home loan and bridging loan. The full amount of peak debt is repaid once the existing home’s sale proceeds are received at settlement.

Are there any additional fees associated with open bridging finance?

Yes, additional fees can be involved with open bridging finance, such as application fees, valuation fees, legal fees, and early repayment fees. Reviewing the terms and conditions the lender provides is essential to understand the complete cost structure.

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