A bridging loan is a form of short-term financial support that gives you access to instant money for residential or commercial purpose. Since they are rapidly accessible compared to traditional mortgage loans, bridging loans are becoming a popular option for many homeowners in the UK. With flexible terms and easy exit plans, people are using bridging loans to cater to their personal and commercial needs. The global spread of COVID-19 has once again raised the demand for bridging loans. Here, in this post Bridging Finance 4 U have listed the top six reasons people use this flexible and immediate financial product.
#1 To secure a property without encountering delays
Banks and mortgage providers usually take a long time to process an application and releasing funds. In some unfortunate circumstances, you may put yourself at the risk of losing the property if the funds are not received on time. Moreover, you cannot wait for your existing property to get sold. In such situations, where delays are probable, bridging finance in London can be used to bridge the gap between completing the property purchase and availability of an appropriate funding solution. Once the conventional mortgage loan is issued, it can be used to pay back the bridging loan.
#2 To leverage new business opportunities
Sometimes new business opportunities come up at short notice. In such situations, you may require a short-term capital to secure a great business deal. However, your existing payments are stuck and you don’t have adequate capital to close the deal. You cannot even apply for bank loans since it will take several weeks to process your funds and in the meantime, you may lose out the deal. Hence, the only viable option is to take out the bridging loan. The speed at which the application is processed and the money is released enables businesses to secure profitable deals.
#3 To buy a new commercial property
Bridging finance is commonly used by investors who are looking to buy commercial properties, particularly for expanding their portfolio. Much like buying residential properties, bridging loans can be used to access the funds while buying properties for commercial purposes. As commercial assets can be a little difficult to arrange, bridging finance makes sure that you don’t lose a great property deal just because you are not able to arrange funds on time. Bridging loans further allow investors to be competitive in the market by enabling them to capture new sale opportunities.
#4 To buy new commercial assets, such as equipment and machinery
While running an enterprise, large investments are inevitable. New machinery, IT equipment, resources and tools are essential assets to carry out day to day operations. If cash flow is slow, which is causing purchasing delays, choosing the bridging loan could be the right choice. Bridging loans are the right option for some companies as it helps in arranging the funds immediately until the payments are received.
#5 To refurbish the property
Properties that are old and shabby do not inspire confidence and may put off customers from purchasing or renting it. It is essential for buy-to-let investors to undertake refurbishment tasks in order to make the property ready for the new tenants. However, traditional long-term lenders don’t vest interest in funding renovations and refurbishments that last for a couple of months. Thus, bridging loan is an ideal solution in such situations as it can be used to release short-term funds to conduct required renovation work. The refurbishment will not only make your property look better, but will also add value to your property. Thereafter, you can arrange a mortgage against your property.
#6 To buy property at auction
Auction property purchases are very common. If you are applying for the traditional mortgage to buy the property, it can take a considerable amount of time for the mortgage process to complete. When you successfully bid on the property at an auction, you are required to pay a 10% deposit to secure the property, while the rest of the money is due within 28 days. The standard mortgage may take more than 28 days to process, and it may not be suitable for this type of situation. That is why bridging finance can be useful to go ahead with the purchases. The bridging finance can be arranged much faster and repaid once the standard mortgage is ready.
Do you need a bridging loan?
Bridging loans are available in a variety of forms. If you are confused about what bridging finance will work for your particular situation, it is suggested that you seek the advice of a professional bridging loan provider. You will have the opportunity to understand the lending criteria, interest rate, interest terms and repayment conditions. We, at BridgingFinance4U, specialise in offering a wide range of bridging loans, helping homeowners, investors and families overcome financial hiccups. Get in touch with our experts today and we would be happy to help you.