A bridge loan is a short-term financial solution that is used to bridge the gap until a more secure and longer-term form of funding can be arranged. Generally, bridge loans are used in property acquisitions that are time sensitive and involve a chain, meaning that an existing property must be sold in order to fund the purchase of the new property. Taking out a bridging loan would enable the borrower to temporarily secure funds against the value of the existing property, allowing them to close on the new sale while waiting for a buyer for the existing property. Additionally, the borrower was able to delay the sale until a reasonable offer arrived, rather than having to lower their asking price or accept offers below market value.
Banks and other mortgage lenders remain extremely cautious about lending money since we are still reeling from the effects of the recent economic crisis. These actions have had the following effects.
Costs and timing of checking increased
Banks now have to carry out a number of checks and due diligence procedures before they can approve a long-term loan or mortgage, which can take weeks or even months to complete.
An increase in refusals
In general, banks are less likely to lend due to the recent economic crisis. With refusal rates at their highest ever, it is becoming increasingly difficult to obtain a bank loan or mortgage.
A rise in interest rates
As banks are aware of the difficulty people are having in securing mortgages, interest rates have increased as a result of supply and demand.
Commercial Bridge loans provide you with the opportunity to consider the above factors and to find the best mortgage rates and deals available to you. Additionally, funds can be generated quickly and easily through the use of a bridge loan. Using a bridge loan;
- Borrowers do not need to wait for approval
- As they do not need to have a good credit history
- a borrower does not have to undergo rigorous credit examinations and due diligence
- Regular monthly repayments are not required since the bridge loan is fully repaid at the end of the loan’s term.
Bridge loans usually have a repayment term of 6-12 months, after which the loan would be drawn down and settled, including all interest and accrued fees.
Bridge loans: their uses
Over the past few years, bridge loans, or bridging finance in general, have become more widely used for a variety of business purposes. Today, many businesses may use bridge loans for the following purposes:
- Paying suppliers’ invoices.
- Paying subcontractor services.
- Paying large tax bills.
- Kick starting a new project.
Please find below a few frequently asked questions which can assist you in the search for the right commercial bridge loan lender in the UK:
Where can we find the best bridge lender in the United Kingdom?
If you need an immediate financial solution, then finding the right lender for a bridge loan is of the utmost importance, as you will rely on this lender throughout the duration of your loan. Bridge Direct team has over 30 years of experience in lending and the financial sector.
What is the best way to find bridge loans?
You should determine if the bridge loan lender offers loans designed to meet your commercial needs. There are certain bridge loan lenders who specialize in funding certain types of projects or areas. The Bridge Direct team will offer an instant decision on any type of bridge loan for any commercial requirement, as each deal will be assessed individually.
What is the process for applying for a bridge loan?
The application forms for bridge loans are usually straightforward and easy to complete. Using a broker can make the process more complex since they will need information to provide to the bridge loan lenders they represent since they are effectively covering all criteria. You do not need to worry about this with a Bridge Direct loan. The team at Bridge Direct are lenders, not brokers, so you will speak directly with an individual who will make a decision regarding your application immediately.
How can I determine whether I am eligible for a bridge loan?
Find a lender who specializes in the type of bridge loan you require. Bridge Loan lender typically respond to your request immediately or at least on the same day. Regardless of your credit history, we will accept your first and second charges without a credit check.