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Exactly What Are Bridge Loans and How Do they Work?

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Bridge loans have long been a great option to business looking to temporarily free equity that is held in existing property or assets. By utilizing a bridge loan, many business are able to buy additional property quickly, without having to worry about selling their existing property. Borrowers will use bridging finance like this to fulfill the temporary financial gaps, such as when they are awaiting large invoices to be paid, or awaiting longer term finance options like a bank loan or mortgage.

What is the Purpose of a Bridge Loan?

If you are looking to buy an additional property, for buy-to-let or to renovate, then in order to buy the property you will need to either have a lot of funds readily available or have a second mortgage. Due to the recent economic crisis and banks now been less willing to lend out money, getting a fast approval for a second mortgage can take weeks, or even months. If the additional property was bought at auction or has a chain where the sale is time critical, this could result in the sale falling through.

It is in these kind of situations that most property owners can make use of bridge loans or bridging finance to fill these temporary financial gaps. By temporarily releasing the equity held in the existing property the borrower can complete in a timely manner, without losing face or the property sale.

Bridge loans are also extremely useful for any other kind of commercial requirement. For example, business owners could use this bridge loan to help speed up the launch of a new product, helping them to stay ahead of the competition.

How Much Do Bridge Loans Cost?

The interest rates on bridge loans are generally higher than compared to traditional bank home loans or mortgages. However, even though the rate of interest is higher, bridge loans come with additional benefits you will not find with a regular bank loan or mortgage. These advantages include;

  • No credit checks required
  • Fast release of funds
  • Give the borrower additional negotiating power
  • No regular monthly repayments

Here at Bridge Direct, you will get an instant decision on your bridge loan application. When you speak to any member of the Bridge Direct team you are speaking directly with the lender, there are no middle men involved. Bridge Direct is a lender, and not a broker, each bridge loan deal is assessed on its own individual merits, so no matter your situation, even if you have bad or adverse credit, Bridge Direct may have a bridge loan solution for you. The team at bridge direct understands all aspects of bridging finance and will analyse your requirements thoroughly to offer the best possible bridge loan deal instantly.

It is this type of service that you just will not be able to get from high street bank loans or mortgages. The reason for this is because banks need to follow set guidelines, check and due diligence before accepting any loan request. With more and more set criteria being imposed as well such as deposit levels being high and credit check running deeper, more and more mortgage applications are being refused.

What Are the Benefits of Bridge Loans?

Below are just a few advantages of using bridging loans to complete short-term financial requirements:

Instant Simple Loan Approval Process:

Most of bridge loan lenders in the UK will not follow any strict procedures or have set criteria as the loans are secured against capital the borrower currently hold in an existing property or asset. This is one of the reasons why credit history does not necessarily go against the application. However, if you have bad or adverse credit, it is important to contact a bridge loan lender, such as Bridge Direct, who specializes in this area, as they will be able to find the best possible bridge loan deal for you.

Bridge Direct will be able to give you an instant decision on you bridge loan application, and accept it, even when you have bad credit history. No matter what your situation is, Bridge Direct may have a deal suitable for you.

Convenient repayment options:

Bridge loans offer more flexible repayment options than you will find with regular bank loans and mortgages. The amount borrowed in the bridge loan is paid back in its entirety at the time of the loan drawn down, so you don’t need to worry about making the monthly repayments that would be required form a bank loan or mortgage. It is also possible repay the bridge loan in full early.  

Fast loan approval process:

When compared to applying for a conventional bank loan or mortgage, the bridge loan approval process is much, much simpler. Generally speaking your loan will be approved, as long as you hold enough equity is the asset being used as security against the bridge loan.

When using a top bridge loan lender like Bridge Direct, they understand the process inside out and will offer an instant decision on your loan request. In some cases it is also possible to arrange for the funds to be transferred in the same day.

A bridge loan can fill any financial gap:

Bridge loans act as a bridge between quickly releasing funds and securing a longer term funding source, like a bank loan or mortgage. This types of loan can fill the gap for any kind of financial gaps, these include, but are not restricted to;

  • Paying large tax bills
  • Paying supplier invoices
  • Kick start new projects
  • Inject funding to speed up existing projects
  • Buy additional properties at auction
  • Inject cash even with bad or adverse credit history

Tags: Bridge Loans, Bridge Loans Lender, Fast Bridge Loans, Private Bridge Loans

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