A SIMPLE WAY TO BRIDGE
We explain bridging loans in more detail
What is a bridging loan? A bridging loan is a short-term method of finance that is interest-only and provides the borrower with fast access to capital. In many cases the client can receive funds into their account within 48 hours of loan approval and paperwork completion. Each case is assessed individually but most bridging loans range from £30,000 up to large commercial or development loans of several million pounds.
It is important to note that bridging loans are a specialist method of lending and only suit specific situations. It is a secured form of lending, which means that any land, residential property or commercial property that you secure the loan against could be repossessed if you fail to keep up with repayments. This page aims to set out some of the practical and balanced information you need to understand when considering a bridging loan. Click here if you’d like to speak with an expert about your suitability for a bridging loan.
What are bridging loans used for? Bridging loans are used for a wide variety of purposes and can be secured against both residential and commercial properties. Popular uses for bridge loans include:
When the completion of a property deal needs to be done quickly. This could include buying a property at auction or in a situation where the seller is offering discount on a property in exchange for a quick sale.
When the property in question is currently inhabitable and therefore not eligible for a mortgage. This can be common amongst property developers who might have a plan to refurbish a property for resale in a quick timeframe.
When difficulties occur within a property chain and you need to secure your new property before the sale of your current property has been completed.
When fast access to capital is required in order to obtain planning permission for a new development.
The list above is not extensive and there are numerous cases where a bridge loan might be considered. If you’d like to explore the suitability of a bridging loan in your situation click here to request a call back from one of our experts.
What is an exit strategy and why do I need one? It’s important to remember that a bridging loan is a short-term and interest-only loan so having a plan to pay it off is an absolute must. In the world of bridging loans you will hear this being referred to as an ‘exit route’ or ‘exit strategy’. Part of the eligibility check when taking out a bridging loan will include assessing the plan you have in place to fully satisfy the balance of the loan. For property developers the exit strategy is often to sell the property and realise a profit before the loan period expires. In the case of a residential homeowner the exit strategy often involves securing a mortgage on the property, which will be used in place of the short term bridging finance. For more information on bridging loans click the button below.
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