What Are Bridging Loans and What Can They Do For You?

Bridging loans are a type of short-term loan. They are primarily used for buying real estate, usually in emergency situations when someone needs quick cash. Collateral is required for these loans, so the borrower must have assets that can serve as security.

Typically, real property is used as security for a bridging loan, and it can be either residential or commercial, and in the form of property or developments. A combination of residential and commercial properties can also be used, as can offices, land, and even retail locations. So it is clear that in order to obtain a bridging loan, you have to own some property for use as security.

The total amount you are able to borrow will typically be somewhere from 30,000 to 10,000,000. There is a limit to the amount that you can borrow; it is usually a percentage of the market value of the property which you will be using to secure your loan. This is typically limited to about 85% for residential property, 70% for land only, or 65% for commercial property. If other securities are put up as additional collateral, the percentage rate may differ.

You may apply for bridging loans for a variety of reasons. You could be buying an auctioned property, or buying a new property when you are still waiting for funding to come from the sale of current holdings. You could also need it for investing in land, or you might use a loan for for debt consolidation, renovations, investments in property, and business funding, among other things. You can also use bridging loans to finance commercial property purchases.

Bridging loans are costly, so be ready to pay some additional money for this type of short-term borrowing. The cost is varied, typically depending on the kind of property and your credit rating. If you have poor credit, you will have to pay more, but usually between 1% and 2.0%. There will generally be an arrangement fee and a valuation fee associated with your bridging loan. These fees may vary depending on the value of the property.

You can obtain bridging loans from high street lenders or from specialist lenders. Specialist lenders may be able to offer you better rates on bridging loans than high street lenders but you should research both options to find the best one for you.

Bridging loans are short term so expect them to end in about 6 months. This means you will have to pay it back in full. There are options however when you set up your bridging loan to have it run for as long as you need.

Bridging loans are short-term loans that are used as urgent cash in order to purchase a variety of different types of property or to release equity from a currently owned property quickly. If you are looking for bridging loans, you must already own property that can be used as security.