A bridging loan offers a bridge between short-term financial needs and longer-term goals. There is a common misconception that bridging loans can only be used to attain property, but that is not the case.
Bridging loans can be used in various situations where you may need additional financial support. At Bridging Finance Solutions, we believe in making things happen, which is why we are proud to offer bridging loans for a variety of circumstances.
Bridging loans are growing in popularity as a flexible financial option for anyone needing quick access to funding. With the current financial insecurity throughout the country, it is no wonder that an increasing number of people are taking out loans to fund their next projects.
Are bridging loans a good solution in comparison to standard loans? In this blog, we will help you better understand bridging loans, and the pros and cons of using a company such as Bridging Finance Solutions.
Why Should I Take Out a Bridging Loan Over a Standard Loan?
If you’re in need of fast funding and have confidence in your ability to repay within 6 to 18 months, a bridging loan may be the perfect solution. Unlike a standard loan, a bridging loan offers quicker access to funds, giving you the financial flexibility you need when opportunities arise.
Traditional loans can take weeks or even months to organise, so we strongly suggest you apply for a bridging loan if you fast finance is required.
Not convinced? Read on to learn about the pros and cons of bridging loans.
Pros of Bridging Loans
At Bridging Finance Solutions, we believe in the transparency and fairness of our loans. Therefore, we believe it is essential that clients know where they stand when they take out a loan with us.
Some of the benefits of taking out a bridging loan include, but are not limited to:
Quick Access to Necessary Funds
One of the biggest benefits of taking out a bridging loan is the fact it comes with quick access to funds. As previously mentioned, if you were to take out a standard loan, you could be expected to wait months for the loan to be accepted.
Financial issues and hurdles are often incredibly time-sensitive, so it is essential not to have to wait around for fast, available funding, which Bridging Finance Solutions can assist with.
At Bridging Finance Solutions, we can offer bridging loans within days, making us the ideal choice for anyone looking to gain finances quickly, whether for personal use or property investment. (subject to standard underwriting requirements)
Flexibility
Bridging loans are typically a lot more flexible than traditional loans. They often have more flexible exit strategies, and you can repay the loan through several methods, from property sales to other planned financial means.
At Bridging Finance Solutions, we offer flexibility in loan repayment. For example, you can choose to service your interest, which essentially means paying it back monthly. You can also pay it as a lump sum with the rest of the money you owe. Bridging Finance Solutions are always happy to discuss the options available to each client.
Short-Term Solution
Bridging loans are an ideal solution if you do not wish to commit to long-term debt. If you arrange a bridging loan with us, you will be expected to repay it within 12 months.
This means you do not have to worry about making a long-term commitment, as once the 12 months are over, you have no financial obligations to maintain.
Prevents Missed Opportunities
If you’re serious about buying property, you must act decisively and swiftly. The best-value properties won’t stay on the market for long, and hesitation can be costly.
With a fast bridging loan solution, you can confidently commit to property purchasing without the concern of waiting to source funds, which can often be the case with standard loans.
By taking out a bridging loan with us, we can help you achieve your property goals in a more timely, manageable way.
Cons of Bridging Loans
We are confident in the impact and process of our loans, but we always believe in complete transparency with our clients. That is why we think it is important for our clients to understand the potential risks.
When reading about the disadvantages of taking out a bridging loan, remember that many of these scenarios depend on your inability to repay the loan. We don’t encounter this often because we assess every person who takes out a bridging loan with us through a specific application for short term funding before reaching an agreement.
Higher Interest Rates
When taking out a bridging loan, you can expect higher interest rates to contend with. The reasoning is simple: bridging loans are usually much shorter, meaning the interest rate is higher.
If you choose to extend your loan or replan your exit strategy, you could be expected to pay more than initially planned, so be sure you only agree to a repayment plan you can afford.
Fees and Costs
When you take out a bridging loan, you may have to pay some additional fees. When borrowing, you can expect arrangement, valuation, and exit fees (if applicable), leading to additional costs on top of your loan repayments.
We always assess any agreements before they are made. This will allow you to calculate any additional fees and determine whether you can afford repayment.
Potential Repossession
When taking out any loan, you could face repossession if you do not repay on time or without giving notice of late payment.
Bridging loans are typically secured against a property, so if you miss payments or cannot meet the agreed exit strategy, you may be at risk of repossession.
It is never our goal for our clients to be placed in a difficult position, so we are open to working with you to ensure you can meet your payment dates; we simply require communication throughout the process.
Should You Take Out a Bridging Loan?
Bridging loans can be used in an array of circumstances, making them the perfect solution for many financial pressures. You may benefit from a bridging loan if you fall under the following criteria:
- You are a property investor or developer looking for residential development finance: a quick investment opportunity, refurbishment, developer or the opportunity to develop a buy-to-let property.
- You are a homebuyer facing time-sensitive situations, at risk of experiencing a chain break or needing to downsize or upsize quickly.
- You are a business needing capital for growth or planned expansion. (suitable property asset to be provided)
If you are in any of the following situations, you may benefit from taking out a bridging loan.
Tax Repayment
One of the biggest advantages of a bridging loan is that it does not have to be used to pay for property. A bridging loan can also help businesses or individuals settle time-critical debts or meet tax demands.
A widespread use of bridging loans is to settle inheritance tax. Dealing with the loss is hard enough, but it only becomes more difficult when you have an additional financial crisis to overcome.
Instead of being forced to sell your assets quickly to cover costs, taking out a fast bridging loan can provide the breathing room you may need to pay off the debt while dealing with a bereavement.
Fast Property Purchases
At Bridging Finance Solutions, we can provide bridging loans in circumstances where a quick cash injection is essential. Whether you have spotted a suitable auction property or a brilliant investment opportunity, time is often of the essence.
We’ve proudly supported an array of repeat clients in their quest for fast property purchases. Our goal is to seize every opportunity, which is why we’re ready to provide the essential cash boost you need.
Short Term Cash Flow Gaps
Running your own business can be very unpredictable. One month, you may make plenty of profit, while the next, you may struggle. Bridging loans can be used to support organisations dealing with a short-term cash flow gap.
It is important to note that shorter-term loans are often subject to higher interest rates, so you should ensure that you are aware of this before making the commitment.
Because a bridging loan can be obtained within days, you can quickly address any cash flow gaps you are experiencing.
Make it Happen With Bridging Finance Solutions
We hope this blog has helped you better understand how a bridging loan can benefit you.
If you would like to learn more about what to anticipate from a bridging loan or determine your eligibility for the application process, please contact our team as soon as possible to discuss whether or not you meet the criteria.
Alternatively, you can complete our application form, and a member of our team will contact you shortly.
BFS can make it happen for you.
