Bridging Loans: What Are They and Who Uses Them?
In an ever more complex financial landscape, bridging loans are playing a part in keeping the property market and commerce moving smoothly. Both individuals and businesses are using them to fill the temporary gaps in finances caused by economic uncertainty and the impact of tighter regulation.
Individuals operating in the property market are impacted by the speed at which houses come on to the market and price inflation. In an overheated market a quick exchange of contracts may be necessary to secure the property, and your long-term mortgage may not be in place, or your own house may still be on the market.
Rather than lose the home of your dreams, you may wish to consider a bridging loan. The Financial Conduct Authority defines a bridging loan as an agreement which has no fixed period or alternatively has a settlement date of less than 12 months from when it is taken out where it is arranged to provide temporary finance until an alternative solution is found to fund a property, or a regulated mortgage contract which has a term of twelve months or less.
It may be that you want to build your own home and need to secure the land before you can begin the work and talk to mortgage providers. A bridging loan would be an ideal solution to that kind of problem. A major renovation or conversion project would also be a project where this kind of finance can play a part. Similarly, at auction a bridging loan can provide you with the deposit required to secure a purchase prior to completion.
The lender will want to see a repayment strategy such as a mortgage or equity from a sale, whichever type of loan you take out.
Bridging loans can be expensive, and typically there is a set-up fee, so shop around for the best deal.
Businesses can also take advantage of commercial bridging loans to raise money for new ventures or to spread costs, including taxation liabilities.
Whether you are looking for new business loans Northern Ireland or in the rest of the UK, you will find lots of options at sites such as www.assetfinanceni.com.
By securing the loan against existing assets, the business can access cash to help it through a difficult period until the financial climate improves.