BRIDGING LOANS
A bridging loan is a type of short-term financing solution that is typically used to cover the gap between the purchase of a new property and the sale of an existing property.
Bridging loans are also commonly used by property developers and investors to secure property quickly, finance renovations or refurbishments, or to purchase properties at auction.
If you are in need of a short-term financial solution, bridging loans may be the perfect option for you. However, it is important to understand how they work and how to apply for one.
BENEFITS OF A SHORT-TERM BRIDGING LOAN
There are various reasons why you might want to get a bridging loan, below are some examples.
QUICK ACCESS TO FUNDS
GREATER FLEXIBILITY
SHORT-TERM SOLUTION
ACCESS TO HIGHER LOAN AMOUNTS
NO MONTHLY PAYMENTS
NO EXIT FEES
Unlike some traditional forms of financing, bridging loans do not typically come with exit fees, which means that borrowers can repay the loan early without incurring additional charges.
Bridging loans are typically secured against property, which means that borrowers can often access higher loan amounts than they would be able to with unsecured financing.
Bridging loans are more flexible than traditional forms of financing. They can be tailored to meet the specific needs of the borrower, with a range of options available for loan terms, interest rates, and repayment schedules.
Bridging loans are known for their speed and flexibility. They can be arranged quickly, often within a matter of days, which makes them an ideal solution for those who need to secure financing quickly.
Bridging loans are designed to be a short-term financing solution. They are typically offered for a period of between one and eighteen months, which means that borrowers can repay the loan quickly without being tied into a long-term commitment.
Unlike traditional forms of financing where borrowers are required to make monthly payments, bridging loans can be structured so that interest is rolled up until the end of the loan term.
BRIDGING LOAN FAQs
HOW DO BRIDGING LOANS WORK?
Bridging loans are secured against a property or properties, which means that the lender will take a charge over the property as security for the loan. Bridging loans are typically offered for a period of between one and eighteen months.
The loan amount is typically based on the value of the property that is being used as security, and the loan-to-value (LTV) ratio will depend on the lender's criteria and the borrower's circumstances.
Bridging loans can be arranged quickly, often within a matter of days, which makes them an ideal solution for those who need to secure financing quickly.
However, it is important to note that bridging loans are generally more expensive than traditional forms of financing, due to the short-term nature of the loan and the increased risk to the lender.
HOW TO APPLY FOR A BRIDGING LOAN?
To apply for a bridging loan, you will need to provide the lender with information about the property or properties that you are using as security, as well as your personal financial information. The lender will then carry out an assessment to determine whether you are eligible for the loan, and if so, what the loan amount and interest rate will be.
It is important to work with a reputable and experienced mortgage adviser when applying for a bridging loan, as there are many different lenders in the market, each with their own criteria and terms.
If you are considering applying for a bridging loan, it is important to weigh up the costs and benefits carefully, and to work with a mortgage adviser that you can trust. If you have any questions about bridging loans, please feel free to get in touch with us and we will be happy to help.
Your home may be repossessed if you do not keep up with repayments.
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