Taking on any major debts during times of economic uncertainty can be an unsettling prospect. Certainly, it is something that is not to be approached lightly. In fact, it requires careful forethought. When it comes to long-term financial commitments, treading carefully in turbulent times like these is advisable. But when it comes to shorter-term funding solutions like bridging finance, it is still perfectly possible to seek affordable funding. Below we look at the details of bridging finance so you can apply with complete confidence.
Bridging finance differs from most conventional loans and mortgages in that it is a strictly short-term solution. A Bridging loan will typically be repaid within 1 to 18 months of being taken out. It will never be for more than 2 years.
During this, the facility is charged at a fixed rate of monthly interest. This is usually around 0.5%. This means that irrespective of what takes place in the interim, you know exactly how much you will need to pay when the final balance is due.
In addition, many bridging loan specialists give their customers the option of repaying their loans early to save money. If circumstances change and you need to exit your agreement earlier, you can do so without facing additional fees or penalties.
This makes bridging finance a predictable financial product in today’s wholly unpredictable lending landscape. All terms and conditions are tailored to meet the exact requirements of the applicant. Furthermore, the agreement is set in stone before the funds transfer.
A bridging loan can be used for any legal purpose, but there are some applications that are more popular than others. In no specific order, some of the most common uses for bridging finance are as follows:
The fact that bridging finance can be arranged within such a short period of time makes it more advantageous than most comparable loans and mortgages. For example, if your purchase of a new property is imminent, but the sale of your old property is delayed by the planning system, stopping one sale from going through while the other continues, potentially leaving you with nowhere to live, the quick approval times for bridging finance can mean you can secure a £400,000 bridging loan for a London property (or a similar amount for a property wherever you are) to cover the cost of one house until the sale of the other goes through. In addition, the set rate of interest applies monthly so you know exactly where you are, in terms of overall borrowing costs.
Another huge benefit of bridging finance is how comparatively straightforward it is to apply for a bridging loan. Increasingly, major lenders are making it difficult for would-be borrowers to qualify for their mainstream loans and mortgages. High Street banks have a tendency to base their decisions almost entirely on credit scores, which do not provide an accurate indication of an applicant’s viability.
With bridging finance, lending decisions use two primary things:
If you fulfil these two requirements, the rest is largely inconsequential. Poor credit, a history of bankruptcy, no proof of income, and so on – bridging loan specialists welcome applicants from all backgrounds.
Bridging finance, therefore, has the potential to offer an invaluable lifeline to those encountering difficulties obtaining financial support on the High Street. The more difficult it becomes to qualify for mainstream financial products, the more appealing the UK’s growing specialist lending sector becomes.
