Although bridging finance has increased in popularity, many borrowers still lack knowledge about how bridging loans can benefit them. This is why it is important to use a bridging finance broker who can help borrowers navigate the full range of options available.
The diverse uses of bridging loans
Many people only have a vague idea of what a bridging loan is. Most people are aware that bridging finance can be used to complete a house purchase quickly, especially while waiting for the sale of an existing home to complete.
A bridging finance broker will explain the various other uses for short-term bridging loans. These will include completing property auction purchases, developing property and refurbishing property. Non-property uses include paying inheritance tax. Business can use bridging loans to raise short-term capital to deal with temporary cash flow issues, buy stock or purchase equipment.
Help with the application process
To apply for a bridging loan, you will need to supply documents including ones that prove your identity and financial status. If using property as security for the loan, you will need a valuation report and there will be legal work that needs solicitors. A bridging finance broker can help borrowers prepare the necessary paperwork to support their loan application.
The full range
There are many bridging finance lenders – some large financial organisations, others small alternative and specialist lenders. While a borrower can approach lenders directly, they will not always get the best deals by doing so.
A bridging finance broker has access to a much wider range of bridging lenders. The skill of the bridging finance broker is to match the borrower’s needs with the best loan deals for their individual situation. This is not just a matter of finding the lowest price; for example, if speed is essential, the broker will find a lender who will arrange a bridging loan as quickly as possible. Some lenders may not necessarily be the cheapest, but they may excel at customer service.
In most cases, a bridging finance broker should be able to obtain an initial loan application approval within a day or less.
Closed or open and the exit strategy
Bridging loans are either closed or open. Closed loans have a definite repayment date, while open loans can be repaid at any time within the loan period, so it can be repaid early. Closed bridging loans cost less, but if the repayment date is not met, penalties will be charged. A bridging finance broker helps their clients decide which is their best option.
All lenders require an exit strategy, which is a plan of how and when the loan will be repaid. Before any lenders are approached, the broker will be able to assess the viability of the exit strategy and advise on any necessary adjustments.
The first stage
To get started in the process of applying for a bridging loan, talk to Ascot Mortgages. We will look at your loan requirements, then find the most suitable bridging finance lender for you.