Top 5 reasons for taking a bridging loan

The Association of Short Term Lenders (ASTL) recently announced that 16.9% more bridging loans were written in the second quarter of 2013 than in the preceding three months. Bridging finance is becoming increasingly popular for a number of purposes; here are five of the most common.

1. Bridging loans for house purchase or commercial bridging loans

The main advantage of taking out a bridging loan is having quick access to funds. With a fast turnaround, you could receive the finance you need in just a few days. In comparison, getting a mortgage can take weeks. If you’re competing with other buyers, using a bridging loan for house purchase or buying a commercial property will allow you to get your offer in that little bit quicker – which might be all the edge you need.

2: To help get a new business off the ground

You might need money to buy stock or premises for a new business, but don’t have the time to wait (or credit rating to qualify) for funding from other sources, such as banks. You might also want to consolidate outstanding debts before taking the plunge and starting your new business. If you have a solid business plan and just need the funds to make it work, a bridging loan might be what you need.

Opportunities can come and go quickly, so it’s important to be able to access the finance you need as quickly as possible.

3. For a quick cash injection into your business

Whether you are just starting a fledgling business or have been in the market for a few years, you may encounter times when you need cash that your business simply doesn’t have access to. If you need money to resolve an emergency situation or take advantage of a new market opportunity, but don’t have the cash reserves, a bridging loan can provide you with quick finance when it’s needed.

4. Bridging finance to fund a renovation or development project

If you need to refurbish property, a bridging loan can provide funding for the work until you can arrange longer-term finance. Once the renovation has been done, the increase in value of the property can help finance the sale or, alternatively, help secure a mortgage for you (as the value added will act as a deposit for a mortgage loan).

5. To buy auction property

Buying property for sale at auction has a number of advantages; it’s cheap (sometimes as much as 20% below market value), it’s fast, it doesn’t involve a ‘property chain’, there’s no need to negotiate with the seller and there’s no risk of being gazumped. However, if you do find a property at auction, it can be difficult to get a mortgage within the usual 28-day timeframe. A short-term bridging loan can bridge the gap between an auction purchase and mortgage completion and prevent you from missing out on a real bargain.

Read more about buying property at auction.

Get in touch for a bridging loan

If you need a bridging loan for any reason contact us free on the telephone numbers above to discuss your business plan and/or financial needs.

This information should not be interpreted as financial advice. Bridging loan rates are subject to change. Speak to our advisors for a loan illustration.