Applying for a Bridging Loan to overcome financial obstacles
What is a Bridging Loan?
A bridging loan is a short-term loan used by a business until that business secures more permanent financing or removes an existing obligation. Bridging loans are typically offered by banks and other lending institutions and can be used to help individuals and businesses overcome temporary financial obstacles.
Bridging loans can be helpful for businesses who need to cover unexpected expenses, such as wages, supplier invoices or tax related issues. Bridging loans are commonly used by businesses who generally have difficulty obtaining other forms of short-term financing but hold significant equity in investment properties elsewhere.
Bridge loans are available in various formats, and they can provide the user with immediate funds flow. These types of short-term loans are flexible, so there can be tailor made to suit your business application or goal. Bridge loans are an excellent way to overcome financial challenges, and they can help elevate business to the next level and reach their goals.
When it comes to getting over financial obstacles, utilising bridging finance may be the perfect solution. These short-term loans, typically up to one year in length, have high-interest rates and are backed by collateral such as investment property or other assets owned by the company.
As these loans are usually short-term (though some brokers and lenders will offer the option to extend or roll-up on the loan) and have relatively low default rates, they have become widely associated with the purchase of new investment property. However, in reality Bridge Loans can be applied to any business application.
Key Takeaways
A bridging finance is a short-term form of financing generally used until a company can secure more permanent financing such as a bank loan or mortgage. Bridging finance can come in many forms, but all share the same common features. As a rule, bridge loans will generally attract an interest rate higher than the a traditional loan or mortgage, however, they are more flexible and don’t necessarily require regular monthly repayments, as the loan can be settled in full at the end of the term.
Bridging finance can be helpful for a variety of reasons. They can provide temporary financial support while the company looks for more permanent financing options or before they can completely repay existing debt. Bridge loans also offer companies and individuals the flexibility to adjust their borrowing needs as time goes on. This makes them ideal for people and companies who need short-term financial support but do not want to commit to a long-term borrowing arrangement.
A Bridge loan is a loan used to finance a purchase. Bridge loans are widely used in the property industry to buy additional investment properties.
Taking out a Bridge loan is a good option if you need quick access to money but don’t have the time or ability to wait for a traditional loan application process, as typically these types of loans have minimal credit checking requirements.
How a Bridging Loan Works
Bridging loans can be an easy and convenient way to secure funding, and many lenders offer flexible terms and can offer competitive rates. If you’re struggling with financial obstacles and need some help getting over them, consider seeking a bridge loan today.
Bridge loans are a great way to overcome financial obstacles and purchase a new investment property. You can purchase the new investment property with a bridge loan while waiting for an existing one to sell. This type of loan is perfect for people who face difficulty getting approved for a traditional mortgage.
Borrowers use the equity in a current investment property or asset for the down payment on purchasing a new one.
Example of a Bridge Loan
Let’s look at a particular example of a bridge loan application, David plans to purchase a new investment property to expand his property portfolio.
David sees the ideal investment property popup on right move without warning and wants to secure the property quickly before it is snapped up. Whilst he currently doesn’t have the liquid capital available to place a deposit, he does hold significant equity in other investment properties.
By securing a short-term bridge loan against these existing properties David is able to purchase and complete on the new property within days.
With the property now secured David can now look to apply for and secure a longer-term financial solution, such as a mortgage, whilst beginning the renovation works required on the investment property.
With the mortgage secured prior to the end of the bridging term, David can settle the bridge loan in full and then look to pay the mortgage using regular monthly repayments.
Bridge Loans in Property Purchases
If you are looking to buy a new investment property, and an existing one is not yet sold, a bridge loan can help. This type of loan rolls the mortgages of two houses together, giving the buyer flexibility as they wait for their old investment property to sell.
Lenders typically offer property bridge loans worth 70% of the combined value of the two properties. This means that borrowers must have significant equity in the original investment property.
Bridge loan lenders are also able to approve bridge loans to borrowers who have poor credit, due to the loan being secured against existing equity held in the investment properties.
Businesses and Bridge Loans
Bridge loans are a type of loan that is designed specifically for individuals who have difficult time obtaining traditional loans because of their credit or other financial qualifications. Bridge loans are typically available with higher interest rates and shorter repayment terms than traditional loans.
Bridge loans can be a great option for people who need quick access to funding to cover an unexpected expense or fix a problem in their finances.
How to get a bridge loan to buy a house
There are a few different ways to get a bridge loan to buy an investment property. One way is to find a loan specialist who can help you find the best loan options available. Another way is to search for online lenders who offer short-term loans for buying an investment property. Each method has its advantages and disadvantages, so it’s important to choose the option that is best suited for your circumstances.
How to repay a bridge loan
When you take out a bridge loan, you’re borrowing money from a bridge loan lender to help finance a purchase or investment. Depending on the terms of your loan, you may have to pay back the money over time with interest. You can repay a bridging loan in various ways: through regular payments, selling assets, and using the proceeds to pay back the loan.
Pros of bridge loans
Bridge loans are a great way to get a loan if you have a bad or adverse credit history. They can be secured quickly and the funding receive sometime within the same day of application.
Cons of bridge loans
There are a few potential cons to consider when considering a bridge loan. Interest rates on these loans tend to be higher when compared to permanent financing, however this can often be negated when adding the cost of your time and a potential projects time.
How to choose the best bridge loan in the UK region?
Many companies in the UK offer bridge loan services; however, many of these are middlemen without direct access to funds. This means that they themselves will have to find a lender willing to approve and lend the funds. Ideally you should look to select direct lenders as opposed to a broker in order to get the best possible deal.
This means Bridge loan lenders have direct access to funds and can give you an instant decision on any bridging loan application.
How long does it take to get a bridge loan?
There is no set time frame for getting a bridge loan approved and funded, as the process will vary depending on the type of Bridge loan lender and the type of property used to secure the bridge loan.
Most direct bridge loan lenders will be able to give an immediate decision on all requests, as they are the decision maker.
How long does it take to get a bridge loan?
Your lender’s terms may also vary; with a bridge loan, you can borrow up to 70% of your investment properties value. Even if you have bad credit or no credit history, you could still get approved for a bridge loan.
What are first charge or second charge bridge loans?
A first charge bridge is a principal loan on a property, and it takes precedence over all other loans. Meanwhile, a second charge loan is secured against a property that already has a loan or mortgage outstanding. Second-charge loans generally require consent from the first charge lender.
Why is Bridge Direct the best choice for the Bridge loan in the UK?
Bridge Direct offers a variety of bridging loans to suit the needs of its customers. They have over 35 years of experience in the bridging loan industry and are direct lenders, meaning that you will speak directly with a decision-maker when contacting Bridge Direct. Whether you need a short-term solution or something more long-term, Bridge Direct may have the perfect solution for you and your business.
Bridge Direct believes that each client is unique, so they offer customizable solutions tailored to your specific needs. Bad or adverse credit is considered with first and second charges on the property. They have a great understanding of what clients need and how they can help fulfil their requirements.
Visit www.bridge-direct.com and fill out the form to get a free instant decision on your loan request or you can contact a decision maker directly by calling on 020 3126 4969.