Bridge financing - overcoming liquidity bottlenecks

If you sell your house or condominium, you usually use the capital to be released to buy a new home. However, there is often no money from the sale that could be used as equity for a new home. The new property can therefore not yet be paid for. Interim financing provides a remedy.   

This is a bridging loan that banks only allow for a period of a few weeks to 2 years. This form of credit or loan is usually used for construction and real estate financing to help overcome short-term financial bottlenecks. There are a few things to bear in mind.

Advantages of bridging finance

Bridge financing secures the overall financing of a real estate purchase or project for owners. This means that the money is available flexibly. In addition, the application for interim financing is almost always approved. The installment payments are lower for owners, as only the interest burden is paid. The loan or credit does not have to be repaid in one monthly installment. It is repaid with the profit from the sale that becomes available later or with a new long-term loan with the financing partner.

Financing partners and conditions

Loans and credits with a very short term are more expensive for banks than those with long terms. This is why the interest incurred is higher. As a result, the expenses and processing costs are also higher. This is why not every bank will grant a loan or credit for interim financing. If the money from a building society contract cannot yet be allocated, you should contact the building society. A broker can help you find the best partner for financing your own real estate projects.

In order to obtain interim financing, a number of conditions must be met by the financing partner. Firstly, the sales contract must be notarized by a notary. The owner must have registered his land charge in the land register. This is security for the loan for the bank. It is also important to know that bridging finance is only possible from a minimum loan amount of 200,000 euros.

Tips for better interim financing

When owners sell their old house or condominium to finance a property, a new owner should be found fairly quickly. This is because a notarized draft contract that has already been drawn up also reduces the cost of financing. Even if the money from the sale is not yet available. However, the bank will be more cooperative if the draft agreement contains a fixed date for when the money will be received. The overall financing must be well calculated, because a sales price that has not been calculated correctly can be expensive. Anyone with incomplete financing will have to reckon with additional financing.

Are you looking for suitable real estate financing? Then we will find the right financing partner for you! Contact us and let us advise you!

Further information can be found here:

https://www.finanzcheck.de/baufinanzierung/zwischenfinanzierung/

https://www.vergleich.de/zwischenfinanzierung.html

https://de.wikipedia.org/wiki/Zwischenfinanzierung

Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.

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