A bridging loan is simply a short term financial solution that can be taken out by an individual or a company - which is secured against a residential / commercial property or land, until such time as the property is sold or refinanced with a long-term lender.
Unlike many other forms of finance, a bridging loan is extremely time sensitive. Individuals want the bridging monies in their bank accounts within days, or not at all. They need to move swiftly because the purchase is so time sensitive. If they cannot complete to the seller’s schedule, any preferential terms may evaporate and the deal can be lost. This means that bridging lenders are experts in processing applications within very short timeframes.
Bridging loans do not suit everyone and are generally viewed as lending of last resort but they can provide a viable alternative to remortgaging for those looking to secure short term funds quickly. Indeed short term specialist finance is certainly not the right product for those who are in any form of financial distress. On the contrary, it is designed for those who have some form of wealth through property assets and who wish to use a bridging loan quickly and easily to extract liquidity from these assets.
A bridging loan can provide fast access to funding with the minimum of formalities. It can be used in a number of different circumstances for time critical situations ranging from auction purchases to covering quick renovation work. Bridging finance can help people not to miss out on their chosen property just because they were unable to arrange a long-term mortgage in time to proceed with the purchase. A bridging loan may also be utilised so that borrowers don’t lose their deposit after they exchange if their long term finance option falls through. As illustrated, speed is essential in this sector and bridging loans are invariably much quicker to arrange than a normal residential mortgage. On average a bridging loan will take in the region of only three to five working days from first enquiry to completion.
Changes in financial requirements dictate that a bridging loan is now becoming an increasingly viable facility for a variety of borrowers. Unfortunately many enquiries fall down at the first hurdle - understanding exactly what you, the customer, needs. This is a result of the customer not being aware of what is required to complete the transaction or how the process is handled. For this reason, as well as many others, mortgage advisers and independent financial advisers are vital for borrowers who are inevitably unaware of the conditions, benefits and potential pitfalls attached to a bridging loan. Professionals in their respective fields, such as a good independent financial adviser or mortgage adviser, will be fully aware of the circumstances where a bridging loan could be the best short term option. Or if they are not a specialist in the bridging loan sector then they should have the necessary contact with a specialist in this area to facilitate a bridging loan.
Of course, finding such good financial advice is not always the easiest part of the process but fortunately cherryFind’s free service is specifically designed to help you find professional, advisers to help you to achieve your aims.