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What are the advantages of a property bridging loan?

There are many benefits of Bridging loans compared to other forms of finance. If finance is required only for a short time, they can be the most affordable method of raising the money needed. Additionally, they are quick to set up, and offer flexible lending requirements which means that approvals can be granted quickly and without lengthy checks and can be secured on all kinds of property, even one which isn’t suitable for other lenders.

What can these loans be utilized to do?

Bridging loans are a great option to meet a range of motives

Being able to keep a spot in a chain of sale

When a purchase of property is funded by the proceeds from the sale of a different property, however the sale can’t be completed prior to or even at the same time as the purchase, short-term financing might be needed to make up the gap, so that the purchase may be completed. The bridge only exists until the sale is completed, and then the proceeds will be used to repay the bridge. This is an extremely common usage of bridging loans and frequently thought of as the sole reason to utilize one. But there are numerous other reasons!

Properties that are not fully completed Loans or Refurbishment Finance Renovating, converting, or restoring property

A lot of times, a property is thought not suitable to be mortgaged. It is typically because it is in poor state or for residential properties and buy-to- let mortgages, it might be due to the fact that the property does not have a bathroom or kitchen. The financing for bridging can be secured against a property that other lenders believe to be insufficient. This is extremely beneficial for landlords and developers who are looking to purchase the property to refurbish and later sell or refinance it with a buy-to-let mortgage and then let it out for rent.

Re-Bridging

We are specialists in creating new bridging loans to cover loans that are over or are nearing the expiration date. Facilities are arranged to replace existing facilities by an alternative that is less expensive or to extend a loan’s duration and/or let more money out. The fact that a term is not met on a Bridging loan is usually a sign that something is wrong, and can be extremely costly.

Bridging in residential properties – downsizing and upsizing financing for UK and foreign property purchases

Many of our customers contact us for bridging loans when they find a property that they wish to purchase without waiting for someone else to purchase an existing property. Bridging finance lets them proceed with their plans and they can pay back the loan in the event that the sale does take place.

A property purchased at auction

When you win at auction , a typically 10percent deposit will be made on the same day. The remainder of the purchase price must be paid to be paid within 28 days. It is possible to get it longer! We recommend you read our guide to auctions for more details about purchasing properties through auction. Bridging loans are utilized to purchase properties at auction due to their ability to be set up quickly , ensuring that the purchase can be completed within the specified time.

Quick purchases are ideal in the event that a bargain home or another must-have item is available

In order to ensure the purchase of an absolute sale, the acquisition will require a quick completion. The funds may not be there for the purchase, as capital is usually held in property or another asset. A bridging loan could be secured quickly and quickly against equity that is available in the property. The item of interest can be sold quickly for a profit , and the loan paid back, or the item may be kept or a better long term financing option could be set up to pay off the bridge.

Find solutions for business cash flow issues

Cash flow issues can occur due to a variety of reasons when operating the business. For instance, a bank could request an overdraft facility or customers could be in the process of making payments on their invoices due to seasonality or a the purchase of new equipment could require a sudden purchase.

Business Ventures

The money are available to help you start any new business provided you have a viable way to exit to pay the loan.
Tax issues related to inheritance and probate

Sometimes, funds are needed to deal with inheritance and probate issues. Many reasons can be cited to do this, such as needing to pay off costs on property as well as pay tax as well as other expenses and to repay other beneficiaries.

Buy a house below the market value

A lot of bridging lenders lend against the value of a property and not against the purchase price. This can be beneficial when purchasing property that is being sold at an amount that is lower than its market valuedue to an actual reason!

Prevention of repossession

If a property is scheduled to be repossed, the bridging loan could be utilized to pay off the loan and avoid repossession. The owner is then able to keep control over the property, so they can then sell it according to their own terms and be able to avoid a forced sale.

Property development , which includes changing the use of an asset

Bridging loans are a way to raise funds to finance the construction of a property.

A property can be purchased using a short-term lease

The purchase of a home that has a short-term lease can be a challenge for many lenders, which is why the bridging loan could allow you to buy the property, and also pay for the cost of settling the lease so that you can qualify for an ordinary mortgage.

Tax bill payment

Bridging loans can be made quickly, and could be an option to pay off taxes and save penalties.

Divorce settlements

It is possible to use funds to settle divorces if there is a requirement to speed up the process.

What are the benefits of borrowing bridging loans?

Quick to organize

If a financing facility is needed to obtain a substantial amount of money, this can be accomplished with the help of the business loan or a residential, commercial or but-to-let mortgage. These kinds of loans can require weeks or even months to set up. We can make quick bridge loans, which means that funds are available on your account within just a few hours.

Flexible lending criteria

There are a variety of Bridging loan companies that all possess their own distinctive lending guidelines. In general, bridging lenders aren’t concerned about affordability, income and credit histories. However, they do want to know the value of the property that is being secured and the way to exit. This is the way in that the loan will to be paid back before or at the conclusion of the loan.

All kinds of property are able to be used to secure property

A bridging loan is secured against flats, houses or maisonettes, shops mixed use buildings offices, commercial units as well as care homes and leisure complexes and farms, as well as land development land, building plots. The property can be freehold or leasehold even though the leasehold has only an extremely short amount of time to expire.

You could even apply for properties that are advertised for sale – something that could not be accepted by other lenders.

property that is in poor repair

The property being used as security could be in poor state or abandoned, or require significant reconstruction. Bridging loans are usually used to raise money in cases where an asset that is secured not acceptable for a mortgage lender.

Non-standard construction of properties

A lot of mortgage companies will only lend to properties that are classified as typical construction. Bridging loans are secured against properties not typical or unique construction.

Multiple properties are able to be used as security

A bridging finance facility may utilize some or all of the properties as security. It could be on a first – or second- fee basis or a mixture of both! For instance, in the case of buying a house, the entire purchase price might require raising. This is why a bridging loan might be made by means of one cost on the house that is to be purchased , as well as a charge on a property with an existing mortgage however, it has equity.

Any purpose loan

Traditional lenders typically only allow borrowing for certain purpose and usually don’t allow any room for flexibility. The lenders who offer bridging loans don’t care the purpose you’re planning to use the funds to do, so you prove that you are able to pay it back.

This can put you in a better chance of negotiating a purchase

A deal from a cash-paying buyer is more appealing to sellers than one who is forced to sell their home first. You can also make use of this opportunity to negotiate a higher price.

What are the negatives of the bridging loan?

Bridging loans are intended to be a short-term alternative to finance.

Their interest rate per month is very high when compared to other forms of financing and shouldn’t be considered for long-term purposes. It is crucial to establish a plan of exit since at the end of the stipulated time frame, the bridging loan needs to be paid back.