Maximising Your Financial Potential: The Benefits of Bridging Loans
Recently updated on March 8th, 2023 at 03:12 pm
Bridging loans can be a great short-term funding solution for personal or business use.
But what exactly are bridging loans? What are their advantages? And can I get a bridging loan to buy a house? Read on to learn more about bridging loans and how they work.
What is a bridging loan?
A bridging loan is a type of short-term funding that can be used for various purposes. It’s an increasingly popular alternative for borrowers seeking access to funds quickly. In addition, bridging loans are renowned for having flexible terms and requiring less documentation compared to other loans.
Bridging loans are usually secured against the equity in the borrower’s current property and are paid off when the property is sold.
What are the uses of bridging loans?
A bridging loan can be used for both personal and business purposes. With a bridging loan, you can access the equity you have accumulated in your home and use the money to pay deposits for a new property and other purposes. Common uses of bridging loans are:
- ‘Bridging the gap’ between buying and selling a property
As the name suggests, a bridging loan helps ‘bridge the gap’ between selling and purchasing properties. In addition, a bridging loan can help avoid temporary rental costs and storage.
- Buy an investment property
A bridging loan provides quick access to funds to provide a deposit or acquire an investment property.
- Property renovations
A bridging loan can be used for renovations or repairs. This strategy is often used to maximise a property’s sale price prior to going to market. The loan is then repaid once the property is sold.
- Auction
A bridging loan can be used to purchase a property at auction as a ‘stop-gap’ solution that enables the acquisition, whilst a traditional bank processes the home loan.
Can I get a bridging loan to buy a house?
Yes, you can use a bridging loan to buy a house. Bridging loans are short-term loans that can be used to bridge the gap between the purchase of a new property and the sale of an existing one. This type of loan is often used when a buyer needs to quickly secure a new property before their current one has sold.
Factors to consider when choosing a bridging loan provider
Choosing a reliable and trusted bridging loan is important. A finance broker is well positioned to help advise which funding solution is most aligned with your requirements.
Before taking a bridging loan, consider the following:
-
Lender rates, fees and terms
Compare the interest rates, fees and terms of a lender (again, preferably in conjunction with a finance broker).
- Reputation
Make sure you feel comfortable with the bridging loan lender’s reputation. Discuss the lender’s reputation with the finance broker. In addition, review their website and Google Business Reviews to see what other borrower’s experiences have been.
- Professional and experienced staff
A reputable bridging loan provider employs experienced staff who understand the intricacies of bridging finance and can provide you with the best advice and support. They adhere to high standards of professionalism and ethics, and will be committed to processing your loan in a fair and transparent manner.
- Flexible options
Bridging loan lenders are renowned for offering fast, flexible funding solutions – particularly non-bank lenders, specialist and private lenders. The loan rate and term will vary from lender to lender.
- Fast approvals
Many borrowers require fast approvals when seeking a bridging loan to take advantage of a time-sensitive opportunity. Non-bank lenders, specialist and private lenders are renowned for their speed of funding.
Key takeaway
A bridging loan is typically secured against collateral (usually property). It can provide quick and convenient financing for individuals or companies needing short-term finance
Since 2001, Mango Mortgages has provided individuals and companies with competitive, flexible bridging loans. We are customer-centric, and our funding solutions are tailored to meet your needs. Since 2001, we have been helping individuals and businesses acquire short-term loans.
Mango Credit
Yanis Derums is the Founder and Director of Mango Credit– a leading private lender specialising in bridging loans for personal use and business short term loans for commercial and/ or investment purposes. Yanis has extensive experience with financial analysis, credit assessment, product structuring, and general business management