There is a range of benefits for bridging loan funding which is a type of short term finance that has grown quickly in popularity because they are flexible and quick to arrange.
In addition, they aren’t just used for buying property, which is how most people have heard of the term, but are used for a wide variety of purposes for those who need funds quickly.
Essentially, bridging loan funding is a way to access short-term finance to bridge the gap between, for instance, selling a property and buying another home.
While they are popular with property buyers and developers, and for landlords looking to develop their property portfolio, businesses also use bridging finance to buy stock for a sales campaign, for instance.
Short term bridging loan lenders
Also, since mainstream lenders have tightened their lending criteria, short term bridging loan lenders offer a way to access large sums of money much more quickly.
It should also be appreciated that borrowers may also incur an administration fee for processing the application and the interest rate will be slightly higher than being charged by mainstream lenders.
As with a mortgage, a bridging loan can also have variable and fixed rates so the interest will change or remain the same for the duration of the loan and it’s also possible to ‘roll up’ interest charges so no interest is paid until the loan falls due.
Potential borrowers of bridging loans also need to appreciate the difference between an open and closed bridging loan: an open bridging loan is one where the borrower does not know beforehand when they will repay the money, whereas a closed bridging loan means the borrower does know how and when they will repay the money.
Looking at closed bridging loans UK
Another benefit is that for those looking at closed bridging loans UK will tend to get slightly better terms for this reason.
Indeed, knowing how and when the bridging loan will be repaid is known as an ‘exit strategy’ and potential borrowers need to appreciate this before they begin the application process.
However, another benefit for bridge loan funding is that the loan’s application process is much quicker than for mainstream lenders and, in some circumstances, a bridging loan can be arranged in a day or so.
For anybody who wants to know more about the benefits of bridging loan funding, then the team at The Bridge Crowd will be able to help.