What can I use a bridging loan for and when might I need one?

Thursday, 30 June 2011 05:08

What can I use a bridging loan for and when might I need one?

What can I use a bridging loan for and when might I need one?

If you need to borrow money quickly, a bridging loan can prove to be incredibly useful.

By taking out this flexible financial product, you may find that you'll be able to meet a wide range of goals. No matter what your circumstances or aspirations are in life, you are almost certain to find bridging loans can help.

Many people opt to use a bridging loan in order to advance up the housing ladder, so if you're looking for assistance in purchasing a property you may want to apply for a bridging loan for this purpose.

If you've come across what you believe to be your dream residence but are struggling to raise the money to buy it, perhaps due to problems selling your current abode, bridging finance can provide the money you need to ensure your new home is not snapped up by another interested buyer.

However, you may also want to consider taking out a bridging loan in order to purchase a home – or homes – you intend to let out.

A number of property developers have sought this kind of product in order to get the funds needed to convert developments into good-quality housing that can be rented out.

Whether it is a single residence or a multi-property development, this kind of loan can provide you with the financial resources you require to not only make the initial purchase but also give you the funds needed to make it suitable to rent out to tenants.

However, the potential uses for bridging loans extend far beyond just buying property. Indeed, as these kinds of credit deal are typically worth several thousand pounds they have often been deployed by consumers keen to fund other major purchases, such as getting a new car.

Others have turned to this kind of loan as a means of stopping their home from being repossessed or to renegotiate multiple debts into something more manageable, so even if you have problems managing your financial commitments in the past bridging loans can prove an option worth considering.

But you should not fall into the mistake of thinking that bridging loans are only suitable in terms of meeting financial goals in your personal life. Many businesspeople have turned towards this kind of product to help their organisation.

While these loans are often used as a way for people to purchase a new home, you'll find that they are equally adept for those wanting to buy new commercial premises – particularly if you are struggling to raise money from your usual mortgage lender. As such, they can be a great way to buy a factory, office space, shop or a warehouse.

Taking out a bridging loan can also prove to be effective if you're looking to inject money into your business or are attempting to make a quick acquisition.

Whatever you wish to achieve when taking out this kind of product, it is important that you always seek out bridging loan advice beforehand. Doing so can provide you with the guidance you need to ensure that you get the right deal for your needs.



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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

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