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5 Uses of Bridging Loans Everyone Should Know

When you see a perfect opportunity to buy a property either for investment, to relocate, or downsize, sometimes it's not possible to wait for the sale of your existing property to finance your new purchase. Bridging loans can help if you don't want to risk missing out on a property that seems exceptional to you.

Though bridging loans are multi-purpose, they are more widely used to finance the property purchases. But initially, you need to understand what is a bridging loan?

Bridging Loan:

Think of it as a bridge between a financing gap. When you cannot find a buyer for your old property quickly, that's where the bridging loan comes in. Bridging loans can be acquired at very short notice with flexible borrowing terms. As long as you provide the necessary security, such as your existing home, you have an excellent chance to acquire funds through bridging loans without extensive background or credit checks. Moreover, the lender of bridging loan can accept any type of property as collateral.

Here is a brief run-down of some amazing uses of bridging loans.

1. Quick Purchase of Property:

A bridging loan can be used for financing a quick purchase if your monies are tied up in other investments or property. The funds raised through bridging loan will be secured against the value of your current property so that you can finance your new purchase quickly. Then, you can have time to find a good deal for your existing property and pay back the bridging loan, or you can develop it further for more returns.

2. Property Development:

Bridging loan is an ideal solution for the people in need of property development finance in the UK. If you are a property investor and needs finances to develop a project, then bridging loan is the best option. You can pay back the loan once the project is completed and has been resold. Learn more about raising 100% development finance at Property Finance Partner or visit this URL.

3. Property Renovation, Refurbishment, and Conversion:

If you want to raise finance to convert, or renovate a property, bridging loans can provide funds to achieve your goal. Perhaps you want to add a bathroom or a kitchen to your property so you can rent it out, bridging loan is useful to cover the costs of short-term renovation projects. Such refurbishment works are required before you can sell your property for profit or refinance it.

4. Buy-to-Let Purchases:

Not everyone has so much cash in hand to purchase a house or other property that generate income in the future. Instead of giving up on your purchase, taking out a bridging loan is a great way to buy the new property. The best thing about a buy-to-let purchase is that you can begin paying back the loan as soon as you receive monthly rent payments from your tenant. This loan allows investors to buy more property when they don't have enough liquid assets to purchase it in cash.

5. Buying Property at Auction:

Placing a winning bid at auction requires you to deposit 10% on the same say to secure that bid on a property. You'll then have 28 days to pay your outstanding balance, which is enough time to arrange bridging finance. Leading bridging loan providers make sure that your application and approval process is quick so that funds can be released on time.

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