It’s no secret that traditional mortgages and bank loans in general are becoming difficult to obtain. Even when an applicant’s financial status surpasses all pre-set requirements, their credit score may count them out of the running.
Or perhaps, their inability to produce a lump sum deposit of up to 20%.
These everyday issues are among the reasons for a significant increase in bridging finance activity over the past couple of years. At the end of 2018, bridging loan application volumes in the UK hit an all-time high.
Short-Term Secured Borrowing
Issued purely on the basis of acceptable collateral, bridging finance can often be accessed without undergoing a credit check. Likewise, deposit requirements are minimal and general qualification criteria simplified.
The result – access to the capital required for almost any purpose within a matter of days, to be repaid in the form of a single payment a few months later.
When time is a factor and traditional High Street loans are out of the question, bridging finance can offer an accessible and affordable lifeline. But what kinds of everyday applications are bridging loans being used for right now?
In what instances could it be beneficial to consider a bridging loan application?
Both in private and professional circles alike, bridging finance can be useful in a variety of common scenarios, which include the following:
Individual Bridging Loan Applications
Avoiding repossession
Bridging loans can help homeowners facing repossession retain their properties and avoid financial ruin. Secured against the property itself, a bridging loan can be used to pay off the outstanding mortgage balance, after which the property can be sold, the loan repaid in full and any profits made retained by the borrower.
Buying bargain properties at auction
Incredible properties often go under the hammer at auction for exceptionally low prices. As it’s possible to organise a bridging loan within a matter of days, the funds needed to secure a bargain property at auction can be accessed at short notice. Again, with the balance of the loan being repaid at a later date when the buyer’s current property sells.
Home upgrades and refurbishments
If planning to sell your home, why not maximise its market value with a series of strategic renovations? Bridging finance can be used to pay for minor and major refurbishments alike, with the balance of the loan being repaid when the property is sold. The profits once again being pocketed by the owner.
Taking advantage of investment opportunities
If you’re presented with a once-in-a-lifetime investment opportunity, you may need quick and convenient access to a decent amount of cash. Private applications for bridging finance for the purpose of taking advantage of investment opportunities are also on the increase across the UK.
Funding new business setup costs
Likewise, breathing life into dreams of entrepreneurship is often dependent on sourcing sufficient funds to get your business off the ground. Designed to be repaid within 6 to 18 months, a bridging loan can be used to help steer a new business through those challenging early days with an affordable short-term funding solution.
Business Bridging Loan Applications
New business opportunities
On the business side of things, raising capital to take advantage of every quality business opportunity that comes along can be tricky. The near-immediate financial injection provided by a bridging loan can be a great way of ensuring potentially profitable business opportunities are leveraged.
Company expansion and diversification
The same also goes for embracing the opportunity to expand, diversify and evolve. Particularly for smaller businesses with their sights set on bigger things, specialist financial support may be needed to fund the more ambitious expansion projects.
Property refurbishments and relocation
Refurbishing a business property or relocating entirely can be costly and disruptive processes. Bridging finance has become a popular choice among entrepreneurs and business owners, as an alternative to more complex, restrictive and longwinded business loans.
Debts and unexpected outgoings
Running a business means the inevitability of occasionally facing financial shortfalls. From unexpected tax bills to staying on top of debts to general outgoings and expenses, bridging finance provides the fast-access funding needed to cover most urgent eventualities.
In Summary…
The speed and simplicity with which bridging finance can be accessed make it an appealing alternative where conventional loans and mortgages are unsuitable. Nevertheless, it’s important to speak with a specialist broker or independent financial adviser, before submitting your application. Your financial situation and intentions for the loan will determine the extent to which bridging finance is suitable for your needs.
In a nutshell – a bridging loan could prove the ideal solution in any instance where a conventional loan or mortgage is anything but. For more information or to discuss your requirements in more detail, speak to a specialist bridging loans broker today.