Essentially bridging loan funding is a secured loan over a short term that is used to fund a large business or private purchase while the borrower arranges longer term finance.
It is, in effect, a short term measure that’s easy to arrange with some lenders able to release funds within 24-hours and these loans can last for any length of period up to two years.
However, the big attraction for bridge loan funding is that they are not only quick to arrange but they also have a wide range of purposes and can be used for fixing a funding problem for private and business owners.
Most common purposes for short term bridging loan
The most common purposes for short term bridging loan include helping to buy a house while a property is being sold and some borrowers use the loans for covering a property chain break so they can still buy their new home while awaiting a mortgage.
Developers and builders also find them useful for completing a building project and self-builders as well if their self-build mortgage has not release funds until a stage of completion whereas a home buyer may need to borrow a large sum to carry out basic work on a home they are buying before a mortgage will be granted.
The loans are also used for redeveloping and renovating buildings to help make them structurally sound or to improve them for refinancing or for selling.
Bridging loans are also used by developers when looking to buy a property that is for sale at an auction.
Bridging loans UK can also be used to help fund a new business venture
But that’s not all, bridging loans UK can also be used to help fund a new business venture while those behind the company raise money into the find other investors.
For anybody considering a bridging loan one important element when making an application will be the question about their exit strategy which means understanding how they will repay the loan when the term ends.
The lender will appreciate that if there is a route to repayment, for instance a mortgage being granted, then the lender will appreciate that the borrower is a lower risk than somebody without an exit strategy.
Also, lenders in the UK offering bridging loans only tend to extend money for land, properties or businesses that are based in the country and the borrower needs to be a UK resident before the loan will be approved.
For more information about bridging loan funding then contact the helpful team at the Bridge Crowd who will be willing to help and the next article in this blog will explain more about short-term bridging loans.