Bridging loans are typically short-term finance that can be used to purchase a property. They may have higher interest rates when compared to a typical high street bank, but the funds are available much quicker.
How it works:
- Short-term: Bridging loans are designed for temporary use, usually lasting up to 12 months.
- Secured against property: The loan is secured against the value of a property, which acts as collateral.
- Quick access: Funds are typically available rapidly, often within days, making it suitable for time-sensitive opportunities.
- Flexible: Bridging Finance can be used for various purposes, including property purchases, auction purchases, business expansion, and refinancing.
Common uses:
- Property purchase: If you find a property you love but need to sell your current home first, a bridging loan can provide the necessary funds.
- Auction purchase: For property auctions, where speed is essential, a bridging loan can secure the property while you arrange permanent financing.
- Business expansion: Businesses may use bridging finance to fund short-term projects or seize opportunities before securing long-term funding.
- Refinancing: If you need to consolidate debts or release equity from a property, a bridging loan can provide a temporary solution.
Important considerations:
- Interest rates: Bridging loan interest rates tend to be higher than traditional mortgages due to the short-term nature and higher risk.
- Repayment: You’ll need a clear exit strategy, such as selling a property or securing a mortgage, to repay the loan.
- Fees: Additional fees, such as arrangement and valuation fees, may apply.
While Bridging Finance can be a valuable tool, it’s essential to fully understand the terms and costs involved. It’s advisable to seek professional advice before proceeding.