A bridging loan is a short-term finance solution that can be used for a multitude of purposes. In this article, we highlight 5 benefits of bridging loans.
1. Bridging loans are fast to arrange
One of the key benefits of bridging finance is that a loan can normally be arranged faster compared to other forms of finance such as a standard mortgage.
However, with a bridging loan, typically, your application can go from being initially approved to funds being released in a matter of weeks. This makes bridging loans an ideal solution when you need funds quickly, such as when buying auction property or when an opportunity is too good to miss.
2. Bridging loans can be used for any legal purpose
Whilst most traditional banks and lenders are specific about the intended purposes of their loan, bridging loans can be used for almost any legal purpose and have limitless potential applications including:
- break a chain
- raise business capital
- fund property development
- pay for renovations and refurbishments
- buy property at auction
- purchase land
- purchase buy-to-let property
3. Bridging loans have flexible lending criteria
Compared with traditional loans, each bridging loan application is judged on its own merits and many lenders are flexible with regards to credit history, proof of income, and affordability and are willing to consider applications from people with credit issues, provided other lending criteria are met.
A strong exit strategy that clearly sets out how you plan to repay the loan will help assist your application.
4. Bridging loans accept most property types as security
A bridging loan can be secured against most property types from standard residential through to semi-commercial, full commercial, and land.
Bridging finance allows you to use property that is in any condition. This includes property in a poor state of repair, in need of refurbishment and renovation, non-standard construction types, derelict properties, and uninhabitable property that other mortgage providers will not lend against.
5. Bridging loans have flexible interest repayment options
Bridging loans are a type of short-term loan, with most being taken out for between 12-36 months. Bridging loans have multiple short-term repayment options, which makes the repayments easier to manage than other types of loans that have long-term monthly payments.
Bridging loan interest can be either serviced or retained. This means you can either choose to make monthly payments and “service” the interest or add the interest onto the loan advance and pay it back in full when the bridging facility is repaid at the end of the term.
From having flexible criteria to being fast to arrange to having a variety of uses, these are just 5 benefits of bridging loans. Get in touch with our finance experts to learn more about the benefits of bridging loans today.