Bridging loans are only an option worth considering in specific financial circumstances whether you’re a commercial or private borrower.
However, as they’re generally provided by specialist companies all manner of situations can be considered and catered for.
Common uses for bridging loans include funding:
Securing a house purchase until your existing property is sold
Covering a break in a property chain so you can buy a new home while waiting for a mortgage
Completing a building project if the next tranche of your self-build mortgage isn’t released until stage-completion
Renovation and redevelopment; altering an existing property structurally or cosmetically with a view to resale or refinance
Buying a property at auction
Paying a tax bill
Funding a new business venture e.g. buying time to raise money internally and/or generate investment
Business invoice finance to help with cash flow while you’re waiting for money to come through
Paying for work to be completed so a mortgage can be agreed; for instance if your mortgage offer is contingent on some basic work being carried out to make it habitable
Refinancing an existing bridging loan
Best Bridging Loan
Consider what you can afford to repay per month on the amount you need to borrow and check the best bridging loan rates to see which lenders fit your budget – and over what period. This will give you the security to know that you aren’t going to be faced with massive repayments that are unrealistic for you to be able to afford.
Bridging loans are cheapest if you can repay them in full once your project’s main financing kicks in, this means trying to confirm (as far as possible) your longer term cash flow prior to taking one out so as to minimise the length of time you need to borrow.
Remember, the short-term nature of bridging loans means that set up fees – potentially running into £1,000s – can have an impact on the cost of the loan comparable to the actual interest rate. This means that when you are looking at the overall cost of the loan you should consider the cost of the set-up fees as these may determine what the cheapest bridging loan actually is.
There are options for other types of secured loans which may be more appropriate to your needs.
At Cavendish Financial Solutions we can arrange open and closed bridging so give us a call today to discuss your project.
Cavendish Financial Solutions is authorised and regulated by the Financial Conduct Authority who oversees all financial business in the UK. You can find us on their website www.fca.org.uk. Our registration number is 461835. Our registered address is 117 South Street, Eastbourne, BN21 4LU