A bridging loan is a short-term finance solution used to bridge a gap in your finances. In this article, we highlight 5 of the best benefits of bridging loans.
- Bridging loans are quick to arrange
Bridging loans are quicker to arrange than traditional mortgages or business loans.
It can take several weeks or months to arrange a standard mortgage. However, with a bridging loan, you can expect to access funds within 2 weeks or even sooner, with some lenders making funds available within 24-48 hours.
This makes bridging finance ideal if you need large amounts of money at short notice such as when organizing auction finance, or when you have a limited timescale to provide funds fast for an opportunity that’s too good to pass.
- Bridging loans have flexible lending criteria
Different bridging loan providers have their own lending criteria, but overall, when taking out a bridging loan, there is more flexibility regarding lending criteria with each application assessed on its own merits.
Lenders are less concerned with your credit rating, proof of income, credit history, and financial position. They are instead more concerned with the value of the property or asset the loan will be secured against and the exit route – how and when the loan is repaid. So, unlike, most loans, those with a poor credit score are more likely to get a loan.
- Bridging loans can be used for any legal purpose
Most traditional banks and lenders are specific about the intended purposes of the loan and authorising them for those purposes only. However, bridging loans can be used for almost any legal purpose and have limitless potential applications including:
- To maintain a place in a property chain
- As refurbishment finance to renovate, convert, or restore a property
- To buy property at auction
- To purchase buy-to-let property
- Property development
- To raise business capital
- To purchase land
- To build a property
- Quick purchases when a bargain comes along
- Bridging loans accept all types of property as security
Bridging finance allows you to use all types of property as security. This includes property in a poor state of repair or in bad condition, derelict buildings, non-standard construction, and property in need of renovation or restoration.
A bridging loan can be secured against houses, flats, maisonettes, shops, mixed-use buildings, commercial units, offices, farms, care homes, land, and building plots. This makes bridging loans ideal when the security property is not acceptable to a standard mortgage provider, such as uninhabitable property.
- Bridging loans offer competitive rates and low borrowing costs
Bridging loans offer competitive rates and low borrowing costs, which makes them a cost-effective option if you want to borrow large sums for a short period of time. Bridging loans can be seen as more affordable than a standard loan as the loan is paid back in a few months, with no excessive ongoing annual rates.
Yes, bridging loans do tend to have higher interest rates than your typical loan, but because the loan is paid back in a few weeks or months rather than over years and years, that interest is controlled and makes the loan more affordable. Plus, bridging finance offers flexible interest payments with no rising interest costs, no exit fees, no redemption penalties, no upfront fees, and no monthly rates.
These are just 5 fantastic benefits of bridging loans. Bridging loans are fast to arrange, have flexible lending criteria, can be used for any legal purpose, accept all types of property as security, and offer an affordable borrowing solution. Get in touch with our finance experts to learn more about the benefits of bridging loans today.
Crystal Bridging Loans is an award-winning finance distributor specializing in bridging loans. Based in Tamworth, Staffordshire, we provide a fast, reliable, and transparent service dedicated to providing simple solutions to even the most complex financial problems.