Information about short term bridging loans
There are a variety of reasons for using short term bridging loans which helps explain why they have grown in popularity recently.
In addition to being flexible and accessible, this type of short-term funding is attractive for a range of reasons.
While most people will use the money to buy a property while their own home is being sold, others are using bridging finance to buy a property at auction or to redevelop a property for selling on.
Landlords are also keen to access this type of short-term funding to develop their portfolio.
Why short term bridging loans UK have grown in popularity
Another reason why short term bridging loans UK have grown in popularity is because high street banks have tightened their lending criteria so finance is harder to come by. They are also taking longer to process loan applications.
This means that bridging loan lenders have grown in popularity since they can offer loans ranging in value from several thousand pounds to several million pounds and the funding can be arranged in just a few days, depending on circumstances.
They are essentially an alternative to mainstream lending and can be used for a range of purposes.
Many lenders have an online bridging loan calculator
However, one of the most important considerations for anybody thinking of a bridging loan is to consider the cost of it which is why many lenders have an online bridging loan calculator to help work out what the costs will be.
Potential borrowers will appreciate that the loans tend to be more expensive because they are flexible and a borrower will need an exit strategy which means they need to know how and when they will be able to repay a bridging loan.
In addition to the flexibility, bridging finance can be used for a wide range of purposes in addition to buying property they include firms wanting to buy stock, for instance, or for employers wanting a short-term cash input for their business.
Another consideration for bridging loans
Another consideration for bridging loans is whether it is going to be open or closed; open means the borrower may not know when they will exit the loan’s terms, while a closed bridging loan means the exit strategy is known.
Another consideration in addition to appreciating the rate of interest to be charged on a bridging loan, is whether the interest payments will be ‘rolled up’.
This essentially means that a borrower does not have to repay on a monthly basis and can instead opt to pay a lump sum when the agreed term comes to an end – this sees the interest charges being rolled up into the final payment.
For more help and advice about short term bridging loans then contact the helpful team at The Bridge Crowd.