Bridging finance saw a steady rise to popularity throughout the second half of last year, when lack of availability on the High Street saw millions seek alternative lenders for essential support.
A convenient and cost-effective alternative to a traditional loan or mortgage, a bridging loan can also be just the thing for time-critical purchases and investments.
Specifically, there are five major advantages to bridging loans that have made them an increasingly popular choice for consumers and businesses across the UK:
1. Bridging Loans Are Fast to Arrange
While a typical mortgage can take several weeks or months to arrange, bridging finance is much faster. In fact, the funds needed by the applicant can often be accessed within a few working days. Bridging loans can therefore provide a real lifeline for covering urgent costs, like purchasing a property at auction.
2. There Are No Limitations on Allocation of Funds
The flexibility of bridging finance is also a major point of appeal. When taking out a conventional mortgage or commercial loan, lenders tend to be very strict with how the funds can and should be allocated. With a bridging loan, the funds provided by the lender can be used for any legal purpose whatsoever. Popular uses of bridging loans include buying land, purchasing buy-to-let properties, covering the costs of renovations, raising business capital and for chain-break purposes when moving home.
3. Bridging Loan Lending Criteria Is Flexible
Irrespective of the size of the loan, bridging finance can be a surprisingly flexible and accessible facility. Even if the applicant has poor credit, lacks proof of income or has a history of insolvency, they could still qualify for a competitive loan. Bridging finance is issued almost exclusively on the basis of security, i.e. the value of the assets the loan is secured against. If you have assets of sufficient value the lender is willing to accept as security, none of the usual obstacles to accessing affordable finance apply.
4. Bridging Loans Can Be Used to Purchase All Types of Properties
Taking out a mortgage or property loan to purchase an uninhabitable, dilapidated or non-standard property can be all-but impossible. The vast majority of banks are simply not willing to lend money against these kinds of properties, which can be appealing prospects for investors and developers. With bridging finance, most lenders are willing to issue loans against almost any type of property. The funds can be used to purchase rundown homes or business premises in a poor state of repair, in order to be renovated, improved and sold on at a significant profit.
5. Bridging Finance Can Be Extremely Affordable
Last but not least, a competitive bridging loan may attach an interest rate of less than 0.5% per months. Where a bridging loan is repaid as quickly as possible – often within the first six months – overall borrowing costs can be kept to absolute minimums. For most short-term borrowing purposes, a good bridging loan has the potential to be the most affordable facility available.
Learn more at Bridgingloans.co.uk.