Bridging Loan & Finance
Bridging loans are only short term (mostly up to 18 months max) they are used as an interim solution only. For longer term secured loan finance <– click here. In effect, the loan serves as a ‘bridge’ between the need for finance and the grasp of funds from current assets. The use of the credit depends on the individual file, but many are taken for property deals where fast purchase is totally imperative. In commercial cases, bridging funds can be taken fund expansion or new projects. The loan will be secured against equity in the property. Bridging loans are well-liked as they offer a fast resolution, and with mainstream lenders less and less willing to offer finance, there is much to be said for this unconventional method of borrowing. You can secure bridging finance against the following types of property:
Houses | Shops | Commercial property | Land | Flats
There are two separate types of bridging loan, the open and closed options. When you enter a bridging contract, you need to have a clear plan to repay the loan. This will be agreed with the lender, and is known as the exit scheme. For a closed bridge, there will be a specific date on which the money will be repaid. This agreement is usually adopted when the borrower is expecting a property to sell on a particular date. An open bridge loan is when the completion date is unknown; in this situation there is usually a window of time, where the bridging loan can be repaid at any point. The previous method is the preferred option by many, as the lender knows precisely when the loan will be repaid. Using unsecured loans can sometimes ease the burden if you don’t require large amounts, and can be acquired sometimes in as little as a few hours via your bank or building society.
Uses for Bridging Finance
Bridging loans are used for many diverse purposes, and the most frequent is to finance assets. Here are some examples:
- When selling a house and purchasing another, the payment on the new home needs to be paid before the sale of the old one is completed. A bridging loan can be easily used to make this payment, and will be repaid from the funds on the property to be sold.
- Discounts on properties are offered widely, but is only dependent upon fast completion which a bridging loan can offer. Properties bought at auction are mostly financed to begin with, by a bridging loan.
- Commercial projects that need to be financed quickly can be aided by bridging funds, with security coming from existing properties owned by the company, and repayment from sale of various assets on completion.
- Companies in transition of ownership can make use of bridging funds to make sure matters run smoothly while changes take place.
Bridging is used by commercial users and individuals alike, and are a useful method of securing cash when needed quickly. Taking out a bridging loan can often be a sensible choice for many, but it is wise to speak with an expert first. We can provide you with help and friendly advice on all angles, and our expertise within our team will help you find the right solution today.
Interest Rates | Fees
A bridging loan will be subject to interest charged just like many loans today. The APR will be higher than with a longer term loan which is why bridging funds are firmly offered only in short term options. You will be charged an arrangement fee to cover admin fees. Be aware that legal fees will too be payable. There will be a required valuation on the property used as the equity source, which could also be subject to fees. These costs will be clearly explained to the borrower at the inception of the loan.
Why use us?
We have the essential knowledge, experience and expertise to advise on the very best bridging loan options for your exact needs. Whether you need an advance for a commercial venture, business expansion or other company funding, or are an individual needing fast completion on a new home or flat – we can help.
Contact us today to discuss your needs – we are waiting for your call.