Bridging loans have two main advantages over traditional bank loans or mortgage – time and flexibility.
A decision about a bridging loan can be made within a matter of hours and the funds can be available in less than two days. This means that if a house purchase needs to be made quickly, a bridging loan can make this a possibility.
Businesses spotting an opportunity that requires quick action can use a bridging loan to complete the deal. An example of this is finding a source for products at a very low price, but one which is only available for a short time. A bridging loan can be used to purchase bulk stock orders that can then be resold at a higher than normal profit margin, or sold more cheaply than competitors.
Another beauty of bridging loans is that they can be used for many purposes. Open bridging finance means there is no fixed repayment date. As long as there is a clear strategy about where the funds will come from to repay the loan, a flexible repayment date can be an advantage.
During the last six months, there has been fierce competition amongst bridging lenders. This has kept interest rates down and also increased the loan-to-value rate of loans. Some lenders offer 80% loan-to-value deals, but interest rates are higher compared to those for 70% or 75% loan-to-value loans.
If time and flexibility are important to you, be sure to talk to a bridging loan broker about bridging finance.