Bridging Loans
Bridging loans are short-term loans, typically over a period of 12 months, used to ‘bridge’ a financial gap. They are especially useful in time-sensitive situations, such as auction purchases, buying a property before selling or meeting a tight deadline.
Why Consider A Bridging Loan?
Bridging loans are flexible loans, with no early repayment charges, which provide a temporary funding solution whilst a longer-term exit strategy is achieved, such as securing a mortgage, liquidating investments, or selling a property. Commonly used to buy a new property before selling, purchasing at auction, managing temporary cash flow issues, raising funds quickly to meet a tight deadline, paying tax bills, or to flip properties without being locked into a mortgage. These loans are renowned for the speed in which they can be arranged, in some cases just a matter of days. Our bridging loan experts will help you secure the best deal available.
Under certain circumstances, bridging loans can be an effective financial solution:
Speed of Arrangement
Bridging loans can be arranged much faster than traditional mortgages, with a less thorough underwriting process, which is crucial in time-sensitive transactions.
Flexibility
Bridging loans can be raised for almost any purpose, allow early repayment without penalty, and can be secured against properties deemed "unmortgageable".
No Affordability Checks
Lenders allow the interest accrued to be added to the loan and repaid when the loan is redeemed, as opposed to making a monthly payment, meaning affordability checks aren't required.
Cash Flow Solution
Bridging loans provide a temporary cash flow solution for businesses or individuals needing immediate funding.
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Frequently Asked Questions
It varies from lender to lender, but generally speaking, bridging loans take 3-4 weeks to complete. It is possible, however, to arrange some bridging loans in as little as 48 hours, but the cost of securing funds that quickly is higher.
Yes, many lenders will consider clients with adverse credit, but you may not be able to access those with the most attractive products. However, there will still be many options available.
Bridging loans can be used for almost any purpose. Typical uses of bridging loans include property refurbishment, the purchase of a new home while waiting for an existing property to sell, repaying tax bills, and cash flow assistance for individuals and businesses.
A bridging loan exit strategy is your planned repayment method. Sale of a property, liquidation of shares or investments, or refinancing with a long-term facility such as a mortgage are the most common bridging loan exit strategies.
There are generally no monthly interest payments on bridging loans, so proof of income is not required. The interest is added to the debt and repaid when the loan is redeemed. However, if the monthly payment is affordable, and you can prove your income, you can choose to service the interest rather than add it to the loan.
Ready to take the next step?
Our team of experts is ready to guide you through the entire mortgage process. If you have any questions about our services or would like to make an enquiry, please get in touch with us today for a no-obligation chat.