A bridging loan bridges the gap between your current financial state and future goals. It provides the capital you need to make an immediate purchase, such as buying a new property or refinancing an existing loan. Bridging loans are typically short-term solutions that offer quick access to funds at competitive rates. Here are four reasons why a bridging loan may be right for you.
1. Fast Access to Funds
For business owners and homeowners seeking short-term financing, bridging loans offer a versatile solution. Unlike traditional bank loans that may take weeks or even months to secure, bridging loans through a secured loan broker can provide access to the funds within days. Due to their fast approval process, bridging loans are often used for emergency purchases, such as buying out a business partner or repaying taxes. The amount offered is typically smaller than what you could get from a bank loan. The average amount is around £250K, but it still gives you the flexibility to cover costs quickly and easily. Bridging loans don’t always require repayment in a certain time frame so that it can be an attractive option for those with temporary needs.
2. Lower Interest Rates
One of the major advantages of a bridging loan is its lower interest rates compared to other types of finance, such as high street bank loans or overdrafts. These lower interest rates enable borrowers to save money on their repayments and make it easier to use bridge financing without breaking the bank. It’s important, however, that you shop around for the best terms and ensure you understand all the fees associated with the loan before finalising any agreements. Bridge loans are fast, convenient, and suitable for many different financial needs, but doing your research is key in ensuring you get the most out of your loan agreement.
3. No Restrictions On the Use of Funds
The beauty of these loans is that they come with minimal restrictions on how they can be used. A bridging loan could work perfectly if you’re looking to purchase more inventory for your business, close on an investment property, pay off creditors to avoid bankruptcy, or simply consolidate debt. It’s also important to note that this type of funding usually comes with high loan-to-value ratios, meaning lenders are comfortable lending out larger sums as long as collateral such as real estate is provided. If you need short-term financing and don’t want to be tied down by rigid rules about how the money can be used, exploring a bridging loan could be just what you need.
4. Improving Your Credit Score
Not only does this improve your chances of getting better interest rates on future loans or lines of credit, it can also open new pathways for your business’ growth and development. In addition, companies that offer bridge financing tend to focus on the current value of collateral rather than one’s past creditworthiness. This provides the opportunity for people with poor personal histories to access quick capital regardless of their credit score, ultimately allowing them to get back on their feet again and return to being financially responsible citizens.
Bridging loans offer a unique and cost-effective way to get short-term financing for your business, property, or other needs. Their fast access to funds and low-interest rates can be very useful in certain situations. In addition, they come with no restrictions on how the money can be used and may even help you improve your credit score. A bridging loan may be the perfect way to get it if you need quick cash.