Bridging loans are typically used and advised for those whom only require finance for a short period time – often providing the cheapest method of raising funds needed. Bridging loans are quick to arrange, and often come with flexible lending criteria so that people can get accepted without having to go through extensive checking processes. These loans can be secured on all types of property, including property which is deemed unsuitable by other kinds of lenders.
What Are Bridging Loans Used For?
There’s a multitude of reasons why people to choose to use bridging loans, with some of the most popular reasons being:
- To maintain places in sale chains
- Buying properties at auction
- For quick purchases when bargain properties or other ‘must have’ items arise
- To solve business short term cash flow problems
- To deal with inheritance tax and probate issues
- To renovate, convert and restore properties
- To buy properties below market value
- To prevent repossession
- For property development
Advantages of Bridging Loans
- Quick to arrange
- Flexible lending criteria
- All types of property can be used to secure loans – even properties in poor states or repair
- Multiple properties can be used as security
Disadvantages of Bridging Loans
Bridging loans are only intended as short term finance options and are therefore only advised for those requiring money for a short period of time. Bridging loans typically come with high interest rates in comparison to other finance methods so those applying should ensure that they have an exit strategy.