For anyone interested in a bridging loan UK then this article will explain simply what a borrower should expect and what the loans can be used for.
It’s important to remember that a bridging loan is an ideal solution for anyone in need of quick capital for a high-value but short-term investment.
A bridging loan is repaid over a period of months rather than for several years, though some bridging loan lenders will offer loans for longer.
Bridging loans are very popular with business owners looking for a quick cash injection as well as with property developers and buy to let landlords who want to buy a property and they may have, for instance, bought a property at auction and need to pay for it quickly.
A UK bridging loan can be used for a variety of purposes
A UK bridging loan can be used for a variety of purposes so in this case let’s look at a property developer who may want to buy a property at auction and they can then repay the sum when the property has been refurbished and then sold.
The bridging loan can also be used to pay for renovating or refurbishing a property prior to a developer selling it and it’s also possible that a developer could get a bridging loan that a mortgage lender would not lend on.
For instance, they may want to refurbish a dilapidated property which may mean adding a bathroom and a bridging loan lender may offer terms whereas a mortgage lender would not.
Essentially, property developers tend to use bridging loans because they can capitalise quickly and easily on market conditions and explore a lucrative opportunity.
Bridging loan rates UK
It’s also wise that anybody interested in a UK bridging loan appreciates what the bridging loan rates in UK are before embarking on borrowing money from a lender since they tend to be more expensive simply because they are a short-term loan.
The bridging loan rates being charged by lenders vary, depending on their enthusiasm for the loan’s purpose and on market conditions, with some lenders offering rates at 0.59% per month.
On top of this bridge loan rate will be an administration fee which may cost anything between 0% and 2% depending on the lender’s criteria and the borrower’s circumstances.
It should also be appreciated that a bridging lender will need a clear exit strategy from the borrower which means they will need to detail how the money will be repaid in the short time period.
That is essentially The Bridge Crowd’s explanation of a bridging loan UK for more help and advice then contact us.