6 Reasons to Use Residential Bridging Loans 

By Stephen Clark | Wednesday 9th December 2020 | 2 minute read

If you need to arrange large sums of finance quickly, and you own a property, one of the fastest ways to access cash is through a bridging loan.

Bridging is a form of flexible short-term lending when you are waiting for the funds to become available from the sale of something else to ‘bridge’ the gap. Sometimes called gap finance, these loans tend to be for 12-18 months, but range from 1-24 months, and are secured against property (residential, commercial, semi-commercial, land, etc). 

Residential bridging loans can provide fast, urgent finance for your property requirements. 

Here are the 6 biggest reasons to use residential bridging loans:

1. To buy a property when you’re waiting for another to be sold / Broken chain

One of the most common reasons for using a bridging loan is to finance the purchase of one property, whilst waiting for another property to be sold. If one link breaks in a property chain, such as if your buyer pulls out, this can ensure that you’re still able to buy the new property. The loan can then be repaid when a new buyer is found for your property.

2. When buying a property at auction

When buying a property via an auction the transaction takes place very quickly. Typically a 10% deposit will secure the property, followed by the balance of the purchase price within 28 days. Residential mortgages will take longer to organise than this, so short-term bridging loans for auction property enable buyers to immediately access funds.

3. Completing property renovation work

If an old, tired or dilapidated property needs a lot of work to make it habitable or mortgageable, it can be hard to find a traditional long-term lender. A bridging loan can fill the funding gap to do building and renovation work allowing you to bring the property up to a good standard. In the case of rental properties, once the property can be lived in comfortably again, then a normal mortgage can be organised.

4. To avoid repossession

For property owners who do not have enough money to stop the bank from repossessing their home or commercial building, bridging loans can offer a fast way to settle debts. Taking out fast bridging loans can give you enough time to then traditionally sell the property instead of accepting a potentially lower offer from the lender.

5. Buying a new build property

Bridging loans for house purchases are common. Property investors often wish to buy new build properties for their buy-to-let investment portfolio. Developers often set tight deadlines & if these are not met, buyers can lose their deposit. A bridging loan can be used to meet the deadline to ensure the sale goes through smoothly.

6. To purchase commercial property

Are you an investor looking to expand your commercial property portfolio?

Arranging traditional finance on commercial & semi-commercial assets can be complex, so a commercial bridging loan can provide the ideal, fast finance solution. This can allow commercial property investors to move quickly & maximise any opportunities as they arise.

Get in touch

To talk to our residential bridging loan specialists to find out more about the cost of bridging loans for property, your eligibility, and answer any other questions you might have, please get in touch with us today.

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