
Interim financing – overcoming liquidity bottlenecks
This is a bridging loan that banks only grant for a period of a few weeks to two years. This type of credit or loan is mostly used for construction and real estate financing to help overcome short-term cash shortages. There are a few things to keep in mind here.
Advantages of interim financing
Interim financing secures the total financing of a real estate purchase or project for owners. This means that the money is available flexibly. In addition, applications for interim financing are almost always approved. The installment payments are lower for owners, as only the interest is paid. The loan or credit does not have to be repaid in monthly installments. It is repaid from the proceeds of the sale or through a new long-term loan with the financing partner.
Financing partners and conditions
Loans and credits with very short terms are more expensive for banks than those with long terms. This is why the interest rates are higher. The same applies to the expenses and processing costs. For this reason, not every bank grants a loan or credit for interim financing. If the money from a building society savings agreement cannot yet be allocated, you should contact the building society. A broker can help you find the best partner for financing your real estate projects.
In order to obtain interim financing, certain conditions must be met by the financing partner. First, the sales contract must be notarized. The owner must have their land charge entered in the land register. This serves as collateral for the bank. It is also important to note that interim financing is only available for a minimum loan amount of $200,000.
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 even a notarized draft contract reduces the financing costs. Even if the money from the sale is not yet available. However, the bank is somewhat more cooperative if this draft includes a fixed date for when the money will be received. The total financing must be well calculated, because a sales price that has not been calculated correctly can be expensive. Anyone with incomplete financing must expect to need 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:
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 case.
Photo: © Thanakorn_Design/Depositphotos.com