Bridging loans – the truth behind the common misconceptions

Thursday, 03 November 2011 05:27

Find out the truth behind bridging loans

Find out the truth behind bridging loans

For many people, bridging loans have been an effective way of getting the money they need quickly. However, there remain several misconceptions about them so if you're unsure whether a bridging loan is for you, it's a good idea to ignore these mistruths and make sure you find out the facts.

Although thousands of Britons have turned to these products for assistance with meeting a range of financial goals in recent years, quite often they are viewed as only being useful for buying property.

Most of those who apply for a bridging loan do so with this reason in mind, but this certainly isn't the only objective that can be realised.

Some people have used them as a way of paying for home improvement works or funding major purchases – such as cars – while other borrowers choose to get them in order to consolidate multiple debts into a single monthly repayment.

However, it is not only private individuals who can obtain a bridging loan. They can also be an effective way for businesses to borrow money, whether it's for assistance in purchasing a commercial development or to inject capital into a firm. Regardless of whether you wish to borrow for personal or corporate reasons, bridging loans can be taken out for virtually any purpose, so there is no need to think that this is an option that won't be open to you.

Many people also believe that bridging loans – by default – are extremely expensive. While they are designed to provide quick finance at short notice, they actually remain very competitive. As is the case with all other financial products, by comparing bridging loan rates from a range of providers you should be able to get a reasonably priced deal.

Perhaps one of the biggest misconceptions about these products is that consumers believe that having an imperfect credit history will automatically prevent them from being able to apply for a loan.

However, this is simply not true and even if you have had problems with repaying store and credit card bills and have upcoming county court judgements this shouldn't act as a barrier to being able to successfully apply for a loan. As long as you own your home and are not presently bankrupt, a bridging finance provider will always consider your application.

It is also worth remembering that the process of applying for and receiving a bridging loan is very quick and that if you have heard rumours that it takes weeks to get one, you ought to discount these. Upon receiving your application, a bridging finance provider will tell if you have been successful within the space of 24 hours. Provided this is the case, the cash could be transferred just a few days later, leaving you to go ahead and spend it as you like.

If you are unsure whether a bridging loan is right for your situation, you should endeavour to seek out advice from an expert. That way you can get the answers to any bridging loan questions you may have and dispel some of the myths and misconceptions that surround these products, before deciding what your next step should be.



blog comments powered by Disqus

Finance articles

  • Is a bridging loan right for budding entrepreneurs?

    Raising the money you need to start a business can be hard, however, there are alternatives to bank loans. Among them are bridging loans, peer-to-peer lending and borrowing money from friends and family, meaning you need to do plenty of research.

  • Important questions to ask bridging loan companies

    Before taking out a bridging loan, you must understand a number of key points. These include the rate of interest you will be charged, the length of time you have to repay the loan and whether there are any arrangement fees that apply.

  • Why bridging loans are only suitable for short-term funding

    You should only consider bridging finance if your funding needs are temporary. This is because the high rates of interest make bridging finance unsuitable as a long-term solution, so if you have long-term needs, you should look at other options.

  • Banks vs. specialist lenders – which bridging loans are best?

    Both banks and specialist bridging loan companies can provide the bridging finance you need, meaning you need to compare products from a range of providers. You need to look at factors such as interest rates and arrangement fees.

  • Can bridging loans work for those who only need small amounts?

    Some bridging loan companies will lend up to £5 million if you have sufficient equity in your home, however, what if your borrowing needs are more modest? If you need a sum of £10,000, bridging loans can still be an option.

View More Articles

Related stories

Bank of England reports mortgage availability best since 2007

The Bank of England reported an improvement in credit conditions

The Bank of England's quarterly credit conditions survey shows that the highest balance of lenders reported increased mortgage availability since 2007 as FLS impacts.

Lending rises but mortgage approvals fall, figures show

Credit card lending up £70m in May

Lending to UK consumers rose last month while approvals for mortgages fell, according to latest Bank of England figures.

Payday loans rise in popularity after bank holiday spending spree

Extra bank holidays lead to rise in payday loans

Payday loans have risen in demand by more than half since early May as bank holidays and inflation have combined to boost Brits' outgoings.

The cheapest eight personal loans for 2013

Rates on personal loans are at their lowest for ten years

A price war on personal loans between £7,500 and £14,999 means that loans are now at their cheapest for ten years. We present the top eight personal loans.

Christmas paid for on credit by half of UK population

Brits have paid for Christmas on credit, according to Which?

A new survey by consumer group Which? says that almost half of Brits have not paid for Christmas costs directly but have relied on credit to cover the costs.

Bad credit? Here's how you can tackle it!

 Bad credit can affect all kinds of people, for different reasons.

Bad credit can affect all kinds of people, for different reasons.

How to learn from financial mistakes of the past

Looking back at past financial decisions can help you avoid future mistakes

As the first month of 2012 draws to a close and credit card bills from Christmas arrive, now is a good time to analyse your finances and see if you can learn from past mistakes.

The cheapest methods of short-term borrowing

Find out the most economical way of borrowing

If you need to borrow money for a short period then find out what is the cheapest way to borrow.

Newsletter sign up


In addition to the weekly newsletter, which areas of finance would you like to hear from us about:

Tick this box if you would like us to send you promotions from carefully selected third parties.

By signing-up you agree to the terms of use and privacy policy.

sign-up button

Get the latest information on: