411homerepair.com

Five Ways to Fund Your Property Purchase

by Nadim Thobhani on Dec 7, 2018

Property purchases can be funded in a variety of ways. Whether you are looking to buy a home or a commercial property of any kind, it’s worth considering all available options. In terms of costs, accessibility, and the simplicity of the payment process, there are marked differences from one funding option to the next.

So with this in mind, here’s a look at five avenues to explore for funding your next property purchase:

Cash

First up, a lump-sum cash payment is by far the quickest and easiest way to acquire property. If you have access to the required funds in cash, you could be looking at an unbeatable deal.

Paying by cash means taking full ownership of the property near instantly, with no additional monthly repayments or contractual obligations to fulfill. In addition, purchasing a property in cash means no interest rates, administration fees, or typical borrowing costs to worry about.

On the downside, it can be difficult to accrue sufficient funds to cover the price of the property and all additional tax/legal costs. In addition, you may be required to prove that you acquired the funds legally, in order to satisfy applicable money laundering regulations.

Mortgages

By a wide margin, mortgages are the most popular and accessible funding sources for property purchases. Typical home loans from major banks attach competitive rates of interest, with the requirement of an initial deposit of around 10%.

Accessibility is perhaps the biggest advantage of a conventional mortgage. The total balance of the loan is divided into monthly payments over a period of up to 30 years – ideal for spreading the costs accordingly. In addition, many mortgage products attach flexible features such as early repayment options, payment breaks, and so on.

On the downside, even a competitive mortgage can prove incredibly costly over the life of the loan. In addition, mortgages are typically only available to applicants able to prove their financial status and pass a series of intensive credit checks.

Bridging Loans

When funds are needed to secure a property purchase as quickly as possible, bridging loans represent an ideal option. Popular among investors and property developers alike, a bridging loan provides access to significant sums of cash with none of the usual delays. Transfers often take place just a few days after the completion of the application.

A bridging loan will typically be secured on the borrower’s existing property, which will also determine how much they’re able to borrow. Unlike traditional loans, bridging loans are designed to be repaid within a matter of weeks, or perhaps a few months at the most. Rapid repayment and the security of collateral allow for bridging loans to be offered with unbeatable overall borrowing costs.

Common applications for bridging loans include covering the costs of urgent renovations, purchasing properties at auction, and generally meeting unexpected expenses.

Family & Friends

Borrowing from family and friends is also an option, which can eliminate many standard borrowing costs from the equation. It can also be a comparatively quick and easy way to access the funds you need, in order to purchase a property by cash.

Nevertheless, it can be difficult to persuade the family and friends to enter into a deal that could see them worse off long-term. With no guarantees, no contractual obligations, and no recourse if things go wrong, they may be reluctant to fund your property purchase.

Secured Loans 

As for typically secured loans, specialist lenders accept various types of collateral from applicants. Business assets, vehicles, jewelry, commercial or industrial premises are all acceptable security for a secured loan.

As with a bridging loan, secured loans typically attach significantly lower rates of interest and more competitive overall borrowing costs. What’s more, it’s unlikely you’ll be required to undergo a credit check, if you’re able to cover the cost of the loan with your assets.

Whichever way you go, it’s worth consulting with an independent broker to explore the available options. 

Latest Articles

Grooved Composite Decking: Benefits and Best Practices

Composite decking has become increasingly popular over the last decade thanks to its durability, low-maintenance, and natural wood-like appearance....

on Nov 23, 2023

Innovative Materials in Modern Rainscreen Systems

In today's world of architectural advancements, the materials we use to protect and adorn our structures have evolved dramatically. Within this...

on Aug 25, 2023

Benefits of Aluminum Windows for Homeowners

Aluminum windows have emerged as a popular choice among Australian homeowners, offering a compelling combination of energy efficiency and modern...

on Aug 10, 2023

Investment Tactics for Premium Condominiums

Singapore continues to be a magnet for property investments, with its robust economy, political stability, and appealing real estate market acting...

on Aug 3, 2023

10 Essential Questions to Ask During a Sunroom and Lanai Consultation

When considering the addition of a sunroom or lanai to your home, a consultation with a professional lanai contractor is crucial. This initial...

on Jul 24, 2023

Sponsored Articles

Actions

More DIY Articles

Great Gadgets That are a Must for Every Kitchen

There are certain electronic gadgets and cooking tools that must be a part of every kitchen. They make cooking easier, help you in cleaning up, and...

Kitchen / Bathrooms

Benefits of Hardwood Floor vs. Carpet

If you are in the market to redo your flooring, you will want to have a flooring company depends on to come out and tackle the job for you....

Floors / Tile / Hardwood

7 Top Home Decor Trends for 2021

A lot of us have spent most of 2020 sheltering in place. We have transformed our living rooms into multifunctional spaces that are all about...

Interior Design / Decor

6 Common Risks Associated with Drinking Water Out of the Tap

The human body relies on water to fuel and replenish overall health and wellness in individuals of all ages. Keeping a healthy and happy body...

Pest Management / Ecology

Benefits of Electrical Test and Tag

Thanks to advances in science and technology, various devices have been developed to make life easier and more comfortable. Yet, regardless of the...

Electrical / Lighting

Contact Us | Submit Article | 411homerepair © 2023