- You can get a bridging loan in 5-14 days – far quicker than a traditional mortgage.
- They’re not just for those in trouble, they can offer real returns to property investors.
- If you are struggling financially, a bridging loan is often a much cheaper alternative to a fast house buying company.
Bridging loans offer quick access to funding to ‘bridge’ a gap, most commonly for the purchase of a property.
If you’re looking for a short-term loan solution, bridging finance could be just what you’re looking for. Here are 6 reasons why this lending option is worth considering. For more, read our guide to the three things to consider before taking out a bridging loan.
1. Bridging loans can be arranged quickly
This one is well documented, but bridging loans can be arranged rapidly, which can come in very handy. This is one of the top reasons to take out a bridging loan.
A bridging loan can usually be completed in 5-14 days. The actual timescale will depend on the type of bridging loan you’re taking and the lender chosen. For example, a loan for extensive property refurbishment may take a little longer than a simple auction purchase. This is because the lender will also need to look into your experience, ability to complete the project and the impact on the property value and saleability.
2. Bridging loans can allow you to profit from property
Most articles about bridging finance tend to focus on avoiding problems, but there can be a real upside to them.
Taking out a bridging loan through a reputable lender can be very profitable if used to fund the right transaction. When buying a property below market value using an open market value (OMV) bridging loan or refurbishing/altering a property there are often large profits to be made using a property refurbishment loan.
Raising finance in this situation via a bridging finance lender can allow you to take on projects that would otherwise, be out of reach or unmortgageable. If you’re unsure about whether this applies to you, our team of specialist brokers is on hand to discuss this further.
3. There are often no monthly repayments with bridging finance
When things are tight, or a new project is being taken on, more outgoings are the last thing you need.
Unlike mortgages, bridging loans are fairly unique in borrowing terms as there are often no monthly payments to make. Instead, you repay your bridging loan interest at the same time as the loan is repaid.
This makes bridging loan repayments far easier to manage than other, similar types of debt.
This makes bridging loans a viable option for those in financial difficulty who are looking to avoid using a fast house sale company.
4. Bridging loans are very flexible
Bridge loan lenders often come across strange or difficult transactions but are often able to make them work, with interest rates to suit your circumstances.
Mortgages and unsecured finance often work to very strict criteria and are often underwritten predominantly using computerised scoring.
This is a far cry from taking out a bridging loan, which is usually underwritten manually by a person. This allows an expert to problem-solve and make common-sense lending decisions.
5. Bridging finance can make your life easier
Bridging loans are a flexible form of lending and they can be arranged both quickly and with minimal hassle. When you need to raise funds to cover a pressing financial matter quickly, then a bridging loan could be ideal.
When you apply for a bridging loan for an urgent short-term borrowing need, you will find the process of selecting the right lender far simpler than you would should you choose a mortgage, especially with help from an experienced bridging loan broker.
6. Bridging loans can prevent financial loss
Bridging loans can be used to prevent financial loss in a number of circumstances. For example, when looking to pay an urgent bill, such as a tax bill which if left unpaid could result in adverse credit being registered against our credit file.
Any adverse credit added to your credit file could result in a higher cost of borrowing, or even an inability to borrow in the future.
Bad credit bridging finance is often used to repay a lender prior to repossession. Again, in this situation, it could work out better to pay the costs of a bridging loan to allow you to avoid repossession and sell the property yourself, potentially at a better price than your lender could achieve.