A Beginner’s Guide To Bridging Loans

Bridging loans were earlier considered as special finance. But in the past few years, many have recognized the advantages of bridging loans and the flexibility it provides to one’s business.

Bridging loans are typically short term loans secured against a property or land for anywhere between 1 to 24 months. It is clear that the rise of bridging loans in the UK stems from the growing demand in the property development market.

Bridging loans are generally provided to individuals, businesses and investors who may come into a considerate amount of money in the future but require the funding for a project or investment right now. It is used to fill in a short period of a cash crunch.

To help you know more about the bridging loans, we, at Finanta, has created a guide to provide a basic lay of the bridging loan in the UK.

When Can Bridging Loans Help?

Bridging loans are usually opted by property developers, investors or landlords. A bridging loan provider will consider the requirement of the bridging loan along with the borrowers. Here are a few instances when a bridging loan can help out.

●Cash Shortfall in Basic Business Needs

When your property is out in the market ready to sell or when you are refinancing a property, you may have some essential cash needs like marketing, taxes, etc. During such times, a bridging loan can help you manage the current cash requirements while you are waiting to make a sale or replenish the current cash needs.

●As a Replacement for Mortgages

You may want to close the deal on the purchase of a property as soon as possible. During such times, taking out a mortgage requires a long waiting period which you cannot afford when you are making an attractive investment. A bridging loan can help you in securing the cash in a week and buy the property and you can repay the bridging loan after 2 years.

●Refinancing for Refurbishment

Do you have to refurbish a part of the property? Maybe you already have a loan on the property and are looking for other forms of cash flow. Refinancing the bridging loan to refurbish the property will give you ample time to make a sale and repay the bridging loan. Bridging loans can be extended with the refinancing option which is one of the attractive features of long term investments.

●Auction Purchases

While bidding in the auction, you need to have the cash at hand or have some means to arrange the cash within 4 weeks (which is the usual period allowed by auction houses to pay the amount). Bridging loans are the easy option to secure the funds in the short term allowing people to bid in the auction with confidence.

●Residential Purchases

For individuals who are purchasing a new home, there may be a shortfall in the cash – may be the buyer of the old house pulled out in the last minute or there was some sudden increase in the cash requirements. During such times, a bridging loan can fill the gap and provide the cash so that the person can go ahead and buy the new home and then repay the loan when the old home gets sold.

●Expanding Property Assets

For businesspersons or investors looking to expand their property portfolio or add to their assets, a little funding help from bridging loans can help a great deal. In some cases, when the total amount of the property isn’t paid in the given time, they might risk losing their deposits. A bridging loan can help out of such funding issues by providing access to the required cash in time.

Choosing The Right Bridging Loan Lender

The most important step in getting a bridging loan is to find the right bridging loan lender. The bigger the lenders, the more investors they will have.

Finanta is one of the UK’s leading bridging loan lenders with an attractive rate of interests. Finanta bridging loans UK cover all kind of cash flow requirements related to property sales and investments. Contact Finanta to talk about your bridging loan needs.