Bridging Finance: Top 5 Benefits And Uses

Bridging finance has been growing in prevalence and popularity for some time, but what are the biggest points of appeal with bridging loans?

Across the UK, the popularity of bridging finance has skyrocketed over the past few years. But what is it that makes bridging finance such a popular choice among private borrowers and commercial customers alike? Moreover, what are bridging loans being used to finance by those taking them out?

The Benefits Of Bridging Finance

When compared to standard High Streets loans and mortgages, bridging loans can be beneficial in the following ways:

  1. They are fast to arrange – a bridging loan of any size and for any purpose can often be arranged within just a few working days. This alone makes bridging finance the ideal facility for time-critical purchase and investment opportunities.
  2. There are no restrictions on how they can be used – unlike a traditional loan or mortgage, lenders place no restrictions whatsoever on how the funds raised with a bridging loan can be allocated. 
  3. Bridging finance can be surprisingly accessible – issues like poor credit or no proof of income that would usually result in an application being declined need not be an issue with bridging finance, where ‘subprime’ applicants are welcome. 
  4. Most property types can be used as security – a bridging loan can be secured against a wide variety of different types of properties, irrespective of current conditions. Mainstream lenders are usually only willing to lend against certain types of properties in a habitable state of repair.
  5. Bridging loans can be highly cost-effective – typically charged at a rate of around 0.5% per month, a promptly repaid bridging loan can be a uniquely affordable facility. Certainly more so than any comparable loan or a mortgage from a mainstream provider.

Top Uses For Bridging Finance

As for how bridging finance is being put to use, these are the top five uses for bridging finance among private customers and business borrowers right now:

  1. Avoiding broken property chains – bridging finance can provide homeowners with the spending power of a cash buyer, enabling them to escape conventional property chains entirely.
  2. Funding fast property purchases – similarly, investors often turn to bridging finance as a flexible facility for picking up properties at low prices at auction. Where full payment for a property needs to be provided as quickly as possible, a fast access bridging loan can be just the thing.
  3. House flipping for capital gains – property developers and investors looking to generate capital gains by flipping homes as fast as possible are also finding bridging finance the ideal funding solution. Repaid in a matter of months at a low monthly rate of interest, a bridging loan can help house-flipping investors maximise their ROI. 
  4. Funding property renovations and extensions – bridging loans can be used to conduct repairs and renovations on homes before putting them on the market, ensuring they sell for the best possible price to generate bigger profits.
  5. Raising business capital – last up, SMEs, in particular, are finding bridging finance a flexible, accessible and affordable facility for raising fast-access capital to support their businesses in turbulent times.

For more information on any of the above or to discuss the benefits of bridging finance in more detail, contact a member of the team at UK Property Finance today.

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