Bridging loans can often mean the difference between a simple and affordable service for those in need for a quick finance solution, and an alternative, lengthy process of finance application which can lead to high-interest rates and playing the waiting game. Bridging loans are particularly popular with businesses who need a quick fix in terms of monetary assistance on a short-term basis, but bridging loans can also be used for residential or personal circumstances, such as a domestic property.
The idea of a bridging loan might seem overwhelming if you’re not sure exactly what the benefits are, so below is a guide to help you understand the positives of this category of loan service.
1. You Can Gain Access to Your Money Extremely Quickly
A common concern with many other loan options is the amount of time you have to wait for your money to clear, or the time taken for companies to make a decision on whether or not to provide you with the finance you need. Especially in the case of purchasing property, the length of time it takes to be approved for a mortgage loan can be very long-winded.
A bridging loan is a perfect solution if you’re in need of your loan amount quickly. The money from certain bridging loans may be available to you in a mere matter of days.
It’s always important to seek loans and financial services from a broker and company you can trust. Consider a bridge loan from Alternative Bridging Corporation as a dependable provider.
2. They Are Effective at Avoiding Property Chains
Being stuck in a property chain is a position a lot of property developers and investors don’t wish to be in. The mortgage applying progress is also notoriously long-winded, meaning the clearance of a loan amount is definitely not going to be within a few days when operating through traditional banking services.
If you’re in a position where you have a certain limited amount of time to purchase a particular property, a bridging loan can be the solution to bypassing a property chain altogether and means significantly quicker access to funds without all the checks banks usually perform.
3. The Repayment Schedule is Flexible
Of course, you’ll still be expected to adhere to some sort of repayment schedule with a bridging loan, and you won’t have complete freedom from any repayment demands, but the repayment schedule for a bridging loan is considerably more flexible than mainstream lenders. Traditional lenders often stipulate a non-negotiable deadline for paying off a loan in full, or else demand a solid minimum-repayment value on a monthly basis. However, with a bridging loan you can enjoy more flexibility with how exactly you want to pay the loan back.
4. You Don’t Need to Explain What Your Loan is For
If you’ve ever applied for any sort of loan, you’ll know that you’re usually asked a myriad of questions regarding what you intend to use the money for in specific detail. Not only does this sometimes feel like an invasion of privacy if you need the money for personal reasons, but you also don’t wish to feel as though your answer will affect whether your loan gets approved or not. For example, ‘to invest in property’ sounds a lot better than ‘to take a nice holiday,’ even though it’s your business what you use the money for. A lot of lenders and bankers specifically stipulate which reasons they will accept for taking out a loan, and which reasons they will not.
Bridging loans eliminate the need to explain yourself. You can use the money for whatever you like, without having to tell the lender what it is. As long as you can prove that you can pay the loan back, the reason for taking it out doesn’t matter.
5. It’s More About Collateral Than Your Current Financial Position
Applying for a loan can be a source of fear when you have to take everything regarding your lifestyle and background into account. Often, it’s the simplest area that can cause a traditional lender to reject a loan application, such as a less-than-average credit score or a dip in income. It can be very stressful to prove that you’re in the perfect position to pay a loan back.
With a bridging loan, you don’t have to show that you have a fantastic credit score, a solid income and a stack of money saved up. You only have to provide an area of collateral, such as a property, for the bridging loan to be secured against. If you can provide the collateral, the lender won’t require you to prove your credit score or financial position.
6. They Come with Low Rates of Interest and Fees
Unfortunately, interest rates and fees will always be part and parcel of taking out a loan. However, when seeking a new loan, you want the option which will charge the lowest rate of interest and associated fees. Bridging loans are usually considerably more affordable in terms of their interest rates compared to mainstream lending.
Because the basis of a bridging loan is to be paid back within a short time frame, there is no opportunity for extortionate rates of interest over time.
