It may be a new year but many of the problems surrounding the global economy last year are still present today and could very well get worse in the next 12 months.
There is the ongoing crisis in the eurozone as well as low growth in many of the world's biggest economies. On top of this, Brazil and China – two of the fastest-growing economies in the world – could experience slowdowns that will affect the rest of the world.
What this means for you is that access to finance could become even more restricted than it already is.
You may have thought that bridging loans represent the best way to access significant amounts of money due to the more relaxed lending criteria taken into account by bridging loan companies.
It is indeed true that factors such as your income, credit history and employment status can be disregarded provided you have some form of security against which you can borrow.
However, many people use their homes as security and problems in the housing market may mean you struggle to obtain finance if you plan to do this.
If you want to borrow money to buy a house because your current abode has not sold, there is no problem tin doing this.
What you must bear in mind and what your lender will consider is whether you have a good chance of selling your home to repay the loan on time.
Bridging loan interest rates can be as high as two per cent each month, so if you fail to sell your home within the 12 month repayment period, you could find yourself paying back significantly more than you borrowed when you eventually sell your home.
You may find that the price you get is not enough to cover the amount you owe, meaning you will have to find the money somewhere else.
On top of this, the value of your home could fall during the 12 months you have to repay the funds, leaving you with a gap to fill.
The same is true if you intend to renovate a block of flats for the purposes of selling them on at a profit. You can often secure bridging loans against a plot of land, but if you fail to sell the properties by the end of the agreement, you will continue to incur interest on your original loan.
By the time you have sold them, there may be little left in the way of profit after you have repaid your lender.
You can take out bridging loans for whatever purpose you like provided you have property to secure the loan against.
If you wanted to go on a luxury holiday and intend to pay the funds back through your earnings, you need to consider the state of the employment market and whether there is a chance you could be made redundant, leaving you with no income stream.
Your bridging loan provider will take these factors into consideration when weighing up your application.
It may be a worthwhile exercise seeking bridging loan help from a financial adviser and explaining to them what you need the money for.
Bridging loans are a short-term financial solution and there may be better options on the table depending on what your needs are, so it is worth exploring them with an expert on the matter.
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.
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.
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.
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.
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.
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