Advantages of a Bridging Loan

Here are our top reasons to choose a Bridging Loan:

  • The process is quick

    The speed it takes to complete a Bridging Loan is very short in comparison to a remortgage and even a second mortgage. Although most cases take a week or two from application to payout, a smooth transaction can take just a matter of days - helpful as the purpose of a bridging loan is to bridge the short gap of time until capital is raised.

  • The reasons can be varied

    Many banks will not lend money to businesses to cover a tax bill, or mortgages to investors who have purchased a dilapidated property. As long as you can prove that you can repay the loan imminently, the reason for the loan is often arbitrary.

  • Repayment is flexible

    You can choose whether to pay back the loan on, or by a certain date, as long as the repayment period does not exceed 12 months. Likewise, you can draw on the loan in stages throughout this period.

  • You are in safe hands

    Borrowing against an asset is often daunting, even for experienced borrowers. When using for a bridging loan, you are safe in the knowledge that you are receiving all of the benefits of bridging finance in the saftey of a company that is FCA regulated and compliant.

  • Exit is key

    Unlike other forms of borrowing, income is less important because the borrower will settle the outstanding balance in one payment with a property sale or by refinancing which makes bridging a very flexible form of lending.

A typical bridging loan success story

Now the customers’ children have grown up and moved out, the time has come to downsize. Having owned the family home for over 20 years, downsizing would allow them to repay their mortgage and release a substantial amount of cash to supplement their pension, whilst ensuring that their new home would be suitable for a long and happy retirement.

Having found their ideal property, in the same locality as the old family home, close to friends and family, there was one problem – an offer had already been made, whilst the customers own property had only just gone on the market. They needed to act quickly and promise a quick exchange on their purchase.

The sellers of the new property accepted the customers offer, subject to an exchange and completion within 3 weeks. A bridging facility was arranged, using the customers existing property as security and funded in time for the clients to get the keys on their new home on the day agreed. The loan would be repaid upon sale of the old family home and the customers could enjoy a relaxing Christmas safe in the knowledge that they had purchased the home they had wanted.

Factors affecting the interest rate you will receive

As with a secured, an unsecured or a bank loan, there are some factors that will affect the interest rate that you will receive. Bear in mind that this can work both ways - as much as a poor credit score may negatively impact your rate, a good score will result in a better rate. These factors include but are not limited to:

The credit score of the homeowner

Weather its a closed or open bridge loan

The size of loan is in comparison with the property value

The type of security provided by the borrower

The duration of the repayment period

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