It’s common to assume that bridging loans are aimed exclusively at property investors. Since the dawn of bridging finance, these specialist loans have served as an invaluable lifeline for developers and investors at all levels. But to assume bridging finance is available only for property investment purposes is to do these flexible funding solutions a huge disservice.
When are bridging loans used?
In practice, a bridging loan can be used in any instance where a significant sum is required as quickly as possible for a comparatively short period of time. As the loan is typically paid back within a matter of months, bridging loan rates and overall borrowing costs can be exponentially lower than those of more traditional mortgages and lending products.
You only need to check out a bridging loan calculator to see just how affordable bridging finance can be.
What are bridging loans used for?
Designed to cover moderate to major expenses on a strictly short-term basis, bridging loans can be the cheapest available option. But in what instances are bridging loans considered useful? Aside from major property investments for business purposes, when else may a borrower find bridging finance the ideal funding solution?
Purchasing properties at auction
It’s worth remembering that it isn’t only investors and developers that take an interest in properties at auction. If the home of your dreams goes under the hammer at a bargain price, a bridging loan could cover the costs until you sell your current property.
Avoiding repossession
Struggling homeowners facing the threat of repossession have very few viable avenues to explore. However, a more amicable alternative to repossession could be to pay off the outstanding balance in full with a bridging loan, sell the property, repay the loan, and retain any additional equity. far better than simply relinquishing ownership of the property in its entirety.
Funding home improvements
Borrowing against the equity tied up in your property by way of a bridging loan can also be useful for funding home improvements and alterations. From simple renovations to challenging extension works, a bridging loan can provide the funds required in a matter of days.
Covering business costs
For business owners in general, bridging finance represents an open and accessible financial solution for covering urgent and unexpected costs. One example of this is meeting unexpected tax liabilities, which simply cannot be put off until a later date. If a substantial amount of money is needed and needed fast for business purposes of any kind, bridging loans are worth considering.
All-purpose private borrowing
If the required collateral can be provided to cover the cost of the loan, bridging finance can be secured for almost any purpose. Just as long as the balance of the loan and all borrowing costs can be repaid as agreed, private borrowers have complete freedom of choice with how they allocate the funds. vehicle purchases, a new business establishment, or even an extravagant holiday to pay for at a later date. Limitless scope and absolutely zero limitations from a uniquely flexible and accessible funding solution.
For more information on any aspect of bridging finance or to discuss your requirements in more detail, contact a member of the team today.