For many reasons we all need access to funding whether it’s as a business or on a personal level and finding the best short term bridging loan in a crowded marketplace could be crucial.
That’s because bridging loans are growing in popularity which also means that the number of short-term finance providers are also growing in offering different interest rates and loan terms. Research is key to finding the best deal possible.
For those who are not aware of what bridging loans are, they are generally aimed at property buyers over a short-term to help bridge the gap between receiving funds from a property sale and having to pay for a new property.
However, the range of purposes that people and businesses can use for short-term bridging have grown and help explain why they have increased in popularity.
Bridging loan funding advice is available from specialist advisers and mortgage brokers who will find the best possible deal though it should be appreciated that the flexibility of accessing a large sum of money at short notice comes at a price.
Bridging loan rates are often slightly higher
For instance, bridging loan rates are often slightly higher than are charged by high street banks and lenders often have administration fees to pay as well. As with a mortgage, the interest rates for a bridging loan can be variable or fixed.
A fixed rate of interest means the same rate is applied across the loan’s term so the borrower will pay the same amount every month.
While a variable rate for a bridging loan means that the repayments could go up or down depending on the prevailing rate of interest.
However, they are quick to arrange, certainly more so than a high street lender, and borrowers can access an amount of money that ranges from several thousand pounds to several million pounds in just a few days.
Bridging loan funding is a popular choice
Bridging loan funding is a popular choice with property developers, for instance, who might want to buy a home at auction and they need to arrange the finance for purchasing the property very quickly.
They may not be able to access a traditional mortgage within the timescale and, indeed, a mortgage lender may be reluctant to lend on a property that does not meet its criteria and is in need of extensive refurbishment.
The other terminology that someone interested in a short-term bridging loan needs to appreciate is whether it’s closed or open.
A closed bridging loan is for those who have an exit strategy in place which means they know when they can repay the loan on a fixed date. For example, someone who is using the bridging loan to buy a new home while waiting for their current home sale to complete and will know when contracts are exchanged so they will have the cash to repay.
There’s also the option of an open bridging loan where there’s no fixed date for repaying the loan. A property developer, for example, may find this type of loan more attractive since they can spend the money refurbishing a property and selling it on to repay what they owe.
For more help and advice about finding the best short term bridging loan, then contact the helpful team at The Bridge crowd.