One Day Bridging Loans
Also referred to as "Daylight Bridging", these loans are used for back to back deals where two transactions (i.e. purchase and re-sale) for the same property complete on the same day.
One day bridging can offer the possibility of little or no money down deals!
A one day bridging loan is a "closed bridge" with the original lender being repaid on the day of lending. Interest costs are low with maybe a small administration fee and of course any legal costs. The maximum loan is in the range 80% - 85% of open market value.
There are essentially two types of transaction associated with a "daylight bridge".
- The first is where a client purchases a property and immediately resells on the same day for a higher price to make a quick profit! Typically for this kind of deal the buyer would have an "option" to buy at one price from the original vendor and a contracted purchase from the eventual owner.
- The second and much more popular option is where a buy-to-let investor buys a property at auction or maybe from a distressed seller at below market value. A bridging lender will lend to make any mortgage effectively a re-mortgage allowing the buyer a near no money down deal or even capital raising. Many investors have profited from this technique.
Update: with the current credit crisis these immediate re-mortgage Buy to Let deals are no longer available at this moment in time. Typically you will have to bridge the purchase for 6 months and then remortgage.