A bridging loan is a short-term loan that is popular for individuals and businesses when they need to settle a transaction in a short time period, and have not had the time to arrange funding. Funding can be arranged against commercial or residential property or other assets with enough equity.
Open-ended bridging products are ideal for companies who are cash poor, in many cases the business plans to sell a property and due to their money being tied up in the business, a bridging loan is a perfect short-term bridging facility that allows them to access funds in the interim. For professional landlords, property investors and developers, bridging finance is an integral part of their property funding strategy.
A bridging loan can be fixed-term or open-ended, if there is a date the money will be released and paid it is a fixed-term loan, if it depends on how long the sale of a property takes it is open-ended. A bridging loan can take as little as 72 hours to arrange and the term of the loan can be as little as 1 day and usually up to a maximum of 12 months.
Why use a bridging loan?
- To raise finance quickly
- To purchase new equipment or machinery quickly
- To refurbish a property
- To finish a development
- To buy at auction
- To purchase property that would not secure a mortgage in its existing condition with a mainstream lender
- To bridge a shortfall of funding between buying and selling property when a sale is delayed
- To raise a deposit for purchasing property
When choosing a bridging loan it is important to find one with a good exit strategy to ensure the loan can be repaid (either via sale or remortgage) to avoid high penalty interest rates. For more information on bridging loans contact our team…
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