Bridging for beginners
Nov 10, 2019
Like most things, the devil is in the detail! It is easy to get bridging wrong, and many do, largely because they blunder in thinking it is easy. It is a simple way of funding deals, but you need to understand how it works. I have been teaching how it works and how to use it intelligently at my Ninja Investor Programme workshops since 2013.
I call bridging counter-intuitive - because they often think in the diametrically opposite way to what you understand about mortgage lenders. Take what you know about how mortgages work- then turn it on its head.
- Mortgage lenders fuss over income, yours or the property's - bridgers don’t care
- Mortgage lenders want you to have clean credit - bridgers don’t care
- Mortgage lenders want the deposit to be your own funds and for you to prove it - bridgers don’t care where you borrow it from
- Mortgage lenders want the property to be in a good enough condition to be ready to rent - bridgers don’t care what the condition is
- Mortgage lenders require you to keep their loan for a few years - bridgers love you paying them back as early as you want to
- Mortgage lenders always lend on the lower of the purchase price or value - some bridgers lend on the value and ignore the purchase price - handy when buying BMV
- Mortgage lenders don’t lend the refurb costs - a few bridgers do
When you need to complete fast a bridger can usually significantly out pace mortgage lenders - which is why bridgers are used for auction purchases.
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