Now more than ever, private and business borrowers alike are exploring the market’s alternative financial services and solutions. Bridging loans in particular having seen explosive growth in popularity over recent years. Providing quick and easy access to potentially large sums of money with highly competitive interest rates, bridging loans can be uniquely flexible, accessible and dynamic in terms of application.
But what exactly are borrowers across the United Kingdom using bridging loans for?
Theoretically, a bridging loan can be used for just about any legal purpose imaginable. Nevertheless, there are certain applications for bridging loans that have proved to be far more popular than others as of late.
A few examples of which include:
- Meeting tight transaction deadlines. One of the biggest problems with mainstream banks and lenders is the extensive time required to underwrite and complete loan transactions. When deadlines are tight, bridging loans can be offered in as little as 2 to 3 days.
- Raising capital. In a similar way to a conventional secured loan, bridging loans allow borrowers to quickly and easily raise capital for any purpose, against the value of existing properties or assets.
- Chain break finance. In the event that the buyer or any other participant in the property sale chain withdraws, a bridging loan can allow the transaction to go ahead. A potential lifeline for residential movers where delays or disruptions occur.
- Auctioned property. Properties sold at auctions must typically be paid for in full within a very short period of time. As it is generally impossible to arrange a conventional mortgage or loan during such a confined time period, bridging loans are ideal for purchasing property at auction.
- Property refurbishments. Most conventional lenders will only lend on properties in accordance with their current condition. By contrast, bridging loans can be secured for the renovation or refurbishment of properties in just about any condition whatsoever. Ideal for developers looking to refurbish and resell residential and commercial properties alike.
- Property conversions. Homeowners and developers often use bridging loans to convert, extend or generally improve their properties, prior to selling them on for the highest possible price.
- Business establishment. Many entrepreneurs in the process of establishing businesses struggle to meet the initial expenses they face. When this is the case, a bridging loan can serve as a real lifeline for smaller and newer businesses.
- Temporary shortfalls. Similarly, businesses of every shape and size may occasionally face temporary financial shortcomings, which can be tackled quickly and effectively with an affordable bridging loan.
The primary message from those working in the alternative lending sector is to consider all available options, before selecting a loan or financial service of any kind. From bridging loans to development finance to secured loans and so on, companies like Donkey Finance offer countless avenues to explore beyond the usual High Street norms.
If traditional loans and mortgages aren’t fit for purpose, this doesn’t mean affordable and accessible financing is out of the question. It simply means looking beyond the conventional and considering something a little more innovative, flexible and dynamic.