Why bridging isn’t just a last resort
By Stephanie Arpapi, marketing & communications director at Lendhub
A bridging loan is a short-term loan that can be used for both commercial and residential property transactions when a decision needs to be made quickly.
Bridging loans are commonly used for a variety of reasons including:
• fast property purchase
• buying property at auction
• fast capital raising
• property refurbishments
• chain breaking
• short-term business cash flow requirements.
A bridging loan can be completed in as little as one week, enabling you to purchase property or raise capital extremely quickly and capitalise on time-sensitive opportunities.
Mainstream lenders are rarely able to complete with the speed of a bridging lender. They cannot always provide the answer you need as quickly as you may require. This can have an impact and delay the process for you. Bridging lenders understand the quirks and the importance of speed, helping you to meet your timescales.
These lenders can also be flexible, helping borrowers to restructure in complex situations prior to moving on to more mainstream products.
Knock before entering
Before entering into a bridging loan, your key considerations should be to try and negotiate the best interest rate for you. Ensure the length of the loan is sufficient for your requirements, as you do not want to be paying expensive extension fees and rates. Be prepared to pay for valuations on properties you are offering as security. It is also usual for the applicant to pay for the lender’s legal fees and his own. And, you need to have a clear strategy for how you will repay the bridging loan.
Bridging finance has evolved significantly over the last decade and is today recognised by many as an alternative source of finance. Saying that, for some, the misconceptions still linger on today. We can safely say that bridging is no longer a last resort for desperate situations. It can be a smart solution for the appropriate opportunity.