Why bridging finance?

Some people think bridging finance is expensive and costs more than it’s worth.  Actually, the returns on your investment far outstrip the costs when the deal is right – and it makes it possible to do things that mortgages don’t allow you to do.  That’s where the profits are.

It is always pragmatic to keep an eye on costs, but not to the degree that you become blinkered to the profitability in a deal.  If you were looking ta a £40,000 profit to be made in a deal, but a bridging loan would cost you £10,000 in fees and interest, reducing your profit to £30,000; what would you do?  Would you walk away or, having overcome your fear of bridging, take the £30,000 profit?

Using other people’s money, joint venturing, often referred to as JV finance is one way of accelerating your property journey, but that usually comes at a cost.  JV finance predominately involves giving away 50% of your profit to the person putting up the cash.

Now here is the little-known big win with bridging finance – it rarely, if ever, eats up 50% of your profit in a deal.

These are some of the key reasons why savvy investors use bridging finance and the specific Ninja Investor strategies I teach to make those deals happen

• You can buy properties that are unmortgageable …50% Below Market Value (BMV) strategy
• You can buy properties much faster
• You can buy properties from auction
• You can buy repossessions
• You can refurbish properties before you buy them … 100% refurbishment strategy
• You can buy properties with little money down … 90% flip strategy

Myths that may be influencing your beliefs

A low income means you can’t buy property.  WRONG!

Bridging finance is based on the value of the asset, not the income of the buyer.

A poor credit record means you’ll be refused finance.  WRONG!

Some blots on your credit record are a huge problem to mortgage lenders, but aren’t usually a big problem for bridgers.  Bridgers will lend to almost anyone except people who are currently bankrupt or people with current serious mortgage arrears.

If you can’t get a mortgage, that means you can’t get bridging finance.  WRONG!

Bridging finance is based on the property, so it has nothing to do with your ability to make regular monthly payments over the medium to long term to eventually pay it back – the property sale (or a future remortgage) will cover the loan.

If you have at least one of these below, that’s good enough. 

• A good income
• Some cash in the bank
• Equity in a property

However, if you’ve either literally nothing in the bank or no assets, plus a low income – no deal!  This doesn’t mean you can’t buy properties, but you will need to joint venture with someone else who can satisfy the bridging company on the essentials.

You need a lot of cash to keep buying properties? WRONG!

Mortgage lenders always lend on the lower of purchase price OR value at point of purchase; so do most bridgers, but a few key bridging companies lend on market value and ignore purchase price.  This knowledge alone puts you in the powerful position of being able to do more deals as you are borrowing against value, not the purchase price.  Now you are starting to think with a Cash Buyer mindset and that means the deposit you need to put down buying property like this can be way smaller than with the Mortgage Buyer mindset.

Now you know this – you’ve got the information you need to replace any false beliefs you may have that you cannot buy property due to low income, poor credit or insufficient cash. 

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