Over the last five years, the interest rates for bridging loans have gradually reduced. Rates currently start at 0.49%, which is the lowest they have ever been, reported Property118.com this month.
When bridging loans first started, they were often seen as loans of last resort in order to speed up the house buying completion process. While many bridging loans are still used for this purpose, bridging finance is now regarded as a useful way of raising short-term finance for a number of purposes. New statistics reveal how bridging loans are used.
Refurbishments account for 27% of all bridging loans. A property that needs extensive work doing on it will often not be eligible for a mortgage. A bridging loan can be used to refurbish the property to a condition where a mortgage can be obtained.
Mortgage delays and house buying chain breaking accounted for 25% of mortgages.
Around 15% of bridging loans were for a variety of miscellaneous reasons. These include extending leases, purchasing land before getting planning permission, and quickly purchasing property at a below market price.
Rebridging loans were at 13%. If a bridging loan is about to expire before the borrower can repay the loan, then re-bridging can extend the loan to avoid punitive interest rates.
Businesses represented 11% of all bridging loans to raise short-term funds, and completing auction-bought property purchases represented 9% of all loans.
To apply for a bridging loan, talk to a bridging finance broker who can find the best deals from a wide range of lenders