For anybody interested in what UK bridging loans can be used for, then the answer is just about anything.
That’s because most bridging finance firms have few restrictions on what the loan can be used for and the amount being borrowed will depend on the property being used as security.
This means a borrower has the potential to access a large amount of money very quickly and on flexible terms.
Most bridging finance lenders can arrange finance within a few days and have an independent surveyor value the security property which will then influence how much the borrower can access. All lenders will have a loan to value limit, with most of them being 70%.
And when we say that borrowers can access a large amount of money with bridging finance the amount will vary between lenders but it’s possible to access several thousand pounds and up to several millions of pounds.
For a potential borrower with a short-term need, bridging finance may be the ideal financial solution.
UK bridging loan
However, a UK bridging loan should only be seen as a short-term fix because they tend to be dearer than a traditional bank loan and carry additional fees and charges that the lender will impose.
It will help that most lenders have a calculator on their website so the borrower will see how much interest will be charged, what the fees will be and what the terms of the loan are.
Most people have heard of bridging loans because they are very popular with people buying a home.
Essentially, they are a short-term funding option that helps to bridge a gap between a debt falling due and the money to pay for it to be available.
This also means that bridging finance offers businesses, as well as individuals, a great opportunity to access money for a range of purposes including the paying of a large tax bill, for example, buying stock or even refurbishing premises.
Also, since the financial crisis of 2008, traditional banks and building societies have introduced tighter lending criteria so it is more difficult to access loans from these sources.
As a result, growing numbers of bridging loan firms have entered the market as growing numbers of people and firms look to this alternative form of finance to satisfy their needs.
Arranging a bridging loan the UK
There’s no doubt that property developers and landlords can utilise the flexibility and speed of arranging a bridging loan UK because they can snap up a property bargain when one appears. For example, they can make a bid at auction and know they will have the finance in place to meet the auctioneer’s deadline.
Increasingly, bridging loans are being seen as an alternative to mainstream lending and they also offer great opportunities for investors looking to take part in the lucrative peer-to-peer lending arena.
For those who are interested in bridging finance, there are a number of terms that you’ll need to understand before proceeding.
Among them is the exit strategy you have in mind which is another way of the lender asking how you will repay the loan.
The lender will be interested in two answers; the first refers to a ‘closed’ bridging loan so you will know when the money will be available to repay the lender.
The second term is an ‘open’ bridging loan which means the borrower does not know when they will have the money for repaying their loan and they may be charged slightly more interest for this purpose.
Also, while the interest rate is higher than for a traditional loan it is possible to have a ‘rolled-up’ loan where there is no interest payable until the loan falls due. Many potential borrowers may find this facility useful.
Benefits of bridging finance
As mentioned earlier, one of the big benefits of bridging finance is that they can be arranged quickly and, for example, the Bridge Crowd can offer a decision in principle in just 30 minutes.
For clients who have a track record with a lender, then the process can be completed within 24 hours while for other applicants the process can take several days or a few weeks, depending on the legal paperwork and the independent surveyor valuing the security property.
However long the process is, it will be much quicker than traditional banks and building societies will be capable of which also helps underline why bridging finance is growing in popularity for those who need quick access to large amounts of cash.
If you need access bridging finance, or if you need to know what the UK bridging loans can be used for, then speak with the team of experts at the Bridge Crowd.