Bridging Loans and Finance Content Hub
What Can a Bridging Loan Be Used for?
Finding yourself between incomes can be a difficult thing to swallow, and while you wait, many a deal could fall through, or you could find yourself at a temporary loss.
In these types of situations, a bridging loan can be the perfect temporary solution. If you’re unsure as to whether your circumstances fit the criteria, then look at our breakdown below and discover the meaning of bridging finance.
Uses for Bridging Loans
What is bridging finance, and what are bridging loans used for?
A bridging loan is an interim form of finance utilised by companies and individuals to provide temporary funding in lieu of a more permanent solution. They are typically useful for dealing with short-term financial obligations while awaiting an inflow of cash.
The truth is, there are various situations that can be solved with bridging finance, meaning that it is often used for multiple reasons:
1. Meeting Transaction Deadlines
Traditionally banks and lenders can take a little bit longer than we wish with approving some loan transactions, and in the world of definite deadlines this is time many of us can’t afford.
Thankfully, bridging finance can be approved within a number of days, meaning your deadlines will be met and neither you nor your business is left out of pocket as banks dot their Is and cross their Ts.
2. Chain Break Finance
It can be incredibly frustrating when a property chain breaks just as the final aspects of the deals are being ironed out.
Thankfully, bridging loans can be used to cover your finances while you find a new buyer for your home. This means you can go ahead and purchase your new investment, find a tenant and relish the financial security as you await the sale of your previous endowment.
3. Property Auctions
Auctions can be a place of opportunity and spontaneity, and while this is both exciting and adventurous it can often mean that properties can be purchased without the buyer having a mortgage agreement already in place.
However, when this does happen, you don’t have to miss out on your perfect place because a bridging loan can cover the costs until the bank can approve your mortgage.
4. Property Refurbishment
If your property needs refurbishment, then many high street lenders may be reluctant to help out. Thankfully a bridging loan can cover these costs and be repaid upon sale.
Alternatively, refurbishment finance can help. Learn more here.
5. Landlords Looking to Expand
Building a property portfolio can be an expensive process, and many landlords are reliant upon rent when it comes to purchasing further properties.
However, to those not willing to wait, a bridging loan can help your expansion and be repaid by refinancing on to a long-term solution, such as a buy-to-let mortgage.