Bridging loan uses
While the most common use of bridging loans is for purchasing a property prior to the sale of another property, or avoiding chain breaks, they can be used for a great many other purposes including but not restricted to:
- Avoiding chains breaking
- Re-bridge / Refinance
- Purchase before sale
- Property Development
- Property refurbishments / renovations
- Conversions & extensions
- Buy-to-Let properties
- Auction purchases
- Land acquisitions
- Purchasing below market value
- Heavy Refurbishments
- Inheritance, tax & probate
- Buying unmortgagable properties
- Capital raising / cash flow
- Avoiding repossessions
- Inheritance tax & probate issues
- HMRC tax Payments
- All circumstances will be considered
We have a wide reach within the funding industry with a strong level of in-house expertise. This ensures that our lending solutions are individually tailored to suit each client’s specific requirements. Funding is available to individuals, companies, SPV’s, and foreign nationals, and can be used for a variety of purposes. Whatever the circumstances, we will have a solution to match.
Security property types
Lending available on many types of property, residential, commercial, and semi-commercial, including properties that are not suitable to other lenders. Finance can be secured on a wide range of property types including the following:
- Residential properties
- Commercial properties
- Buy to let properties
- Residential care homes
- Non-standard construction
- Office buildings
- Retail premises
- Light industrial units
- Hotels/bed & breakfast
- Working farms / Farmhouses
- Leisure premises
- Nursing homes
- Restaurants
- Land with planning
- High-rise apartment blocks
- Licensed premises
- Educational facilities
- Other property types considered
Overall, bridging loans can be a useful tool for borrowers who need quick access to funds or who require flexible financing options. However, they are typically more expensive than traditional loans, so borrowers should carefully consider the costs and risks associated with a bridging loan before deciding to proceed.
Is a bridging loan right for me?
Deciding whether a bridging loan is right for you depends on your specific financial circumstances and needs. A bridging loan is a short-term financing option generally designed to "bridge" the gap between the purchase of a new property and the sale of an existing one. However it can be used for a number of other purposes such as refurbishments or building works etc. Here are some factors to consider when evaluating whether a bridging loan is suitable for you:
- Timing: If you are in a situation where you have found your dream home but haven't sold your current property, a bridging loan can provide temporary funds to complete the purchase. It allows you to avoid missing out on the new property while waiting for your existing property to sell.
- Financial situation: Bridging loans can be an expensive form of finance, with higher interest rates and fees compared to traditional mortgages. Therefore, you should carefully assess your financial capability to service the loan during the bridging period. Consider your income, expenses, and potential risks if your property doesn't sell as quickly as anticipated.
- Repayment strategy: It's crucial to have a clear plan for repaying the bridging loan. Typically, the loan is settled when your existing property sells. Ensure you have a realistic expectation of how long it might take to sell and whether you have alternative sources of funds if the sale process takes longer than expected.
- Exit options: Explore different exit options in case you encounter difficulties with the sale of your existing property. For example, some bridging loans can be converted into longer-term mortgages if needed. Having backup plans can help mitigate potential risks.
- Professional advice: Consider seeking advice from a financial advisor or mortgage broker experienced in bridging loans. They can assess your situation and guide you on the best course of action, taking into account your financial goals and circumstances.
Remember, a bridging loan is a short-term solution, and its suitability depends on your individual circumstances. It's essential to carefully evaluate the costs, risks, and potential benefits before making a decision.
Advantages & disadvantages of a bridging loan
Like any financial product, bridging loans have their advantages and disadvantages. Here are some pros and cons of taking out a bridging loan ...
What are the advantages & disadvantages of a bridging loan? ...
Here are some advantages of a bridging loan ...
- Quick access to funds: Bridging loans are often used in situations where time is of the essence. They can be approved and funded quickly, providing borrowers with the funds they need to complete their transaction.
- Flexible repayment terms: Bridging loans typically have flexible repayment terms, allowing borrowers to repay the loan over a period that suits their needs.
- No monthly repayments: Unlike traditional loans, bridging loans do not require monthly repayments. Instead, borrowers repay the loan in full at the end of the loan term.
- Can be used for a variety of purposes: Bridging loans can be used for a variety of purposes, including property purchases, property development, and business acquisitions.
- No early repayment penalties: Bridging loans do not typically have early repayment penalties, allowing borrowers to repay the loan early without incurring additional costs.
- Can help secure a property: Bridging loans can be used to secure a property while waiting for other financing to come through. This can be particularly useful in a competitive property market, where quick action is necessary to secure a property.
- Credit history not always a barrier: Lenders are often more concerned with the value of the property used as collateral than your credit history, making it easier for some borrowers to qualify.
- Short-term solution: Bridging loans are designed for short-term use, so you're not locked into a long-term commitment.
Here are some disadvantages of a bridging loan ...
- High-Interest Rates: Bridging loans often come with higher interest rates compared to traditional mortgages or loans. This can make them expensive if you keep the loan for an extended period.
- Fees: There are typically various fees associated with bridging loans, including arrangement fees, exit fees, and valuation fees, which can add to the overall cost.
- Risk of Losing Collateral: If you're unable to repay the loan on time, you risk losing the property you've used as collateral.
- Short-Term Solution: While the short-term nature of bridging loans can be a pro, it can also be a con. If you're unable to secure long-term financing or sell your property quickly, you may find yourself in a challenging financial situation.
- Regulation: Bridging loans are less regulated than traditional mortgages, which can lead to potential risks and complications if you're not well-informed or working with reputable lenders.
- Exit Strategy: Lenders will want to see a clear exit strategy, meaning a plan for how you'll repay the loan at the end of the term. If your exit strategy doesn't pan out as expected, it can lead to financial difficulties.
Overall, bridging loans can be a useful tool for borrowers who need quick access to funds or who require flexible financing options.
However, they are typically more expensive than traditional loans, so borrowers should carefully consider the costs and risks associated with a bridging loan before deciding to proceed.
