Archive for the ‘Bridge Lender’ Category

Question: What Are Bridging Loans?

Tuesday, January 19th, 2016

The first question asked by many individuals when undertaking any area of property based finance is what are bridging loans?

Bridging finance products are a relatively unknown and complicated area of property finance but once understood it can be easy to see that the facility provided has many benefits over traditional forms of finance provided by the high-street banks.

So what are bridging loans? Bridging loans are financial products used mainly by property developers as a short-term facility that can be actioned quickly to raise finance on a property asset. The loan is usually secured as a first or second charge on the asset in question and should only be obtained for a short-time period with a clear cut exit to repay the loan.

Bridging facility products can be far more riskier and cost a lot more to take out than high street finance and most people go down the bridging finance route when their banks simply will not lend on the terms they wish, bad credit situation, or if you want to buy a poor condition below market value property for a property investment for which you would be unable to get a high-street mortgage.

Bridging products are offered as a loan against the value (LTV) of your property, with most companies offering the facility at 85-75% of market value. Most of the largest principle lenders in the UK can provide as low as £25, 000 with a view to lending maximum £25 million for the right project.

Bridging finance is provided from private clients funds usually from principle lenders in the UK, the top firms have vast funds for bridging and are usually backed by large institutions, wealthy high-net individuals or commercial banks.

Most bridging lenders will pick and choose what they will lend against and for how much they are willing to lend. Some lenders will only lend within the prime spots in the area. (major cities and metropolitan centres). So now we know the answer to the question what are bridging loans, we need to find a summary of what can they be used for.

Typically a bridging loan is used for one or more of the following:

• Property renovations
• Auction property buying
• Unexpected tax bills
• Land acquisition/refinance
• Home Improvements
• Short-term cash flow problems

And for many other reasons.

Bridging Finance is usually categorised as full status lending or non-status. Full status means you have to be a credit worthy individual and non-status means they lend to people with adverse credit.

Most of the bridging finance provided is done through non-status finance products as this should be the only reason to use secondary banks such as bridging lenders.

If you were an A class credit rated individual/business you would simply go to your bank and speak to your relationship manager to borrow the funds on a short-term basis.

Non-status bridging finance is when a loan is issued based solely on the project, there are no credit scores/checks that would affect the lenders decision. Non-status bridging finance is ideal for individuals with low credit scores, ccjs, arrears and credit defaults.

Bridging Loans

Wednesday, September 23rd, 2015

The title of my article says that bridging finance is for one and all. This means that anyone who is in want of instant financial help can get this in the form of bridging loans. These are short-term economical help used to cope with instant expenses that often arises. For example, you come across a property that is hard to leave. To prevent the deemed property you need to make the financial deal. Now you are not with the amount, nothing to worry, why not apply for the bridging loans. It will prevent the property going from your hand.

Bridging loans are also used until your old properties have been sold out or to win an auction. As the name suggest Bridging is short-term finance and is classically exchanged in full upon the refinance of the property. You can also pay it when you sell your old property. This loan can also be used to innovate old properties so that you can get better price from it. In this way you can earn a good deal and perk up your credit score.

Advantages of Bridging Loans
Bridging finance can be used for property renovation. Later better and permanent lending can be obtained to redeem the bridging loan.
One can apply for the bridging loan if the turnaround of any project is expected shorter. These loans are easily redeemed and one can get it comfortably as compared to commercial finance.
In the case of bridging loans the lenders offers low budget loan in the form of commercial finance or regulated loans.
These loans work great when it comes to bridge financial gap for real estate property. It bears all unexpected cost that may prove expensive for borrowers who are either moving home or planning to do so.
Bridging finance allows the borrower to stay hold with their property until the new construction or alternative is not completed.
Bridging loans for any property enables the owner to complete any leftover task before the mortgage is placed and the lender is paid with the amount.
These loans are a short-term funding and prove great help for the property owner to gain a new property without facing any extra financial burden.
These loans are yet to be popularized because still it is the most under used form of financing
It provides fast access of funding with minimum formalities and is the best solution for future investment and commercial financing.
One can avail these loans for multiple purposes including renovation and purchasing. As these loans are taken for short period of time so it is also termed as interim finance.

Anyone looking to perk up there financial status or to raise capital can opt for financing bridging loans. However it is important that you should have better option in mind to pay the amount back. This can be by selling any old property. Plan well and increase the real estate value of your property with bridging finance.