Bridging loans are short-term flexible loans, and the reasons why you might need them are manifold. Here are seven of them:
1. Property buying chains
The majority of bridging loans are used for house buying chain delays. Many people purchasing a new home are dependent on selling their existing home to raise part or all of the funds for their new purchase.
There are various reasons why selling an existing house can get delayed. The person buying a house could also be waiting for their existing home to sell, and since buying chains can be long, this could cause a delay several houses along.
Sometimes, the buyer of a home pulls out of the purchase which breaks the house buying chain entirely.
Bridging finance can be used to raise the funds to purchase a home, and then repaid once the sale of an existing house has been completed.
2. Funding deals that need to be finalised quickly
It can take a long time for funds to become available from conventional long-term loans such as mortgages and bank loans. Bridging loans can often be completed in a matter of days, which makes them ideal for time sensitive transactions. They are often used until more long-term finance is available.
3. Property auctions
When buying property at an auction, you normally have to pay the full purchase price within 28 days after the auction. It can take longer than that to apply for a mortgage and have the funds available. A bridging loan can be used to complete the sale and then repaid after a mortgage has been arranged.
Many mainstream lenders will not provide a loan for property that requires refurbishing. A bridging loan can be used and then be repaid after the refurbished property has been sold, or when a new loan has been arranged.
5. Property conversions
Conversions include turning large houses into a number of flats and transforming offices into residential buildings. Bridging finance is available to finance conversion work.
6. Cash flow
Businesses that have temporary cash flow problems can use bridging finance to pay their expenses until cash flow increases.
7. Purchasing buy-to-let property
Landlords that want to expand their property portfolio often need to act quickly to secure buy-to-let property purchases. A bridging loan can be secured using their existing properties and arranged within a few days, helping them make immediate purchases.
Applying for bridging finance
To apply for bridging finance, you will need security (usually property) and a clear exit strategy detailing how and when you will repay the bridging loan.
At Ascot Mortgages, we have relationships with a wide range of bridging loan lenders so that we can find the right loan at a competitive price to suit your particular needs. We will explain what documentation you will need to support your bridging finance application.
An initial approval of a loan application can be made within a day, so contact Ascot Mortgages for a no obligation discussion and a bridging loan quote.