Bridging Loans are fast becoming the “go to” option in terms of short term lending as banks tighten up rules around lending. This trend is apparent in both personal and business cases.
As the name suggests Bridging loans are originally designed to “Bridge the Gap” between the purchase of a new property and the sale of an old property. This unique functionality has made bridge loans increasingly popular in the real estate industry across the board for both domestic and commercial property investors. Due to the increase in demand and rising popularity an evolution has occurred making bridging loans more diverse and versatile to meet a wide variety of needs.
It’s now very clear that the recent increases in activity, including new record highs throughout 2016, are not going to diminish any time soon. What’s interesting is the new approach to lending and the wide variety of purposes funds are being used for.
Let’s look at some of the areas where Bridging Loan use has increased, how they are implemented and why they are a popular choice.
It is very common in domestic house sales for delays to occur that could mean missing buying opportunities. This is especially important for families looking for that perfect home who may have very limited choices. In cases such as these bridging loans are perfect because they allow for the new house purchase to be made immediately using funds secured against your home. The loan then becomes payable on the sale of your property. This is by far the most common use of a bridging loan.
Auction Property Sales
Property auctions can present some of the most outstanding opportunities with lower costs and more bang for your buck. Auctions however, require funds in quick succession of the auction date with an upfront deposit on the property and the remaining balance due within days. Of course, a traditional mortgage wouldn’t be fit for purpose in this scenario. Bridging Loans however, are uniquely positioned to be accessible for such situations.
Renovation and Extension
Lenders that need a fast turnaround on building renovations and extensions are becoming increasingly reliant on Bridging Loans for both domestic and commercial properties. In this situation there myriad of reasons for the loan including work needed to meet conditions of a sale or to enable the property to meet requirements of letting it out to tenants. Bridging Loans are perfect for time sensitive requirements due to their accessibility and fast delivery.
Small to medium sized businesses often deal with matters of urgency where money is concerned as unexpected expenses arise. The functions of a bridging loan applicable to businesses is literally endless and can be applied in many situations to bridge the gap when a temporary revenue dip occurs or even to settle tax expenses. Bridging Loans are a suitable choice for businesses because large amounts of money can be accessed quickly averting disaster and allowing the company to recover and prosper.