When looking to finance your development you must carefully consider which loan is the best for you and your circumstances. There are a great many options available from development finance ideal for ground-up builds through to refurbishment loans for both structural and non-structural renovations, with bridging finance often the best solution for all. Here we will look at what bridging finance means and how it could help you get your development going in no time.
What are bridging loans?
Bridging loans are a quick and accessible way to get the funding you need to complete your project or development. Used to, as described, bridge the gap between buying and developing a property and selling or completing it, a bridging loan is a short term loan that can supply you with the capital you need.
There are similarities with other loans and mortgages, but with some key differences that make it particularly suited to developers and investors alike. The average bridging loan lasts around 12-months, a great deal less than the decades that others last. It is also quicker to put together so in a time crunch when you need fast cash, bridging finance can allow you to make your changes and get your property ready for sale and profit as quickly as possible.
How do they work?
A bridging loan company considers the potential value of your property after the development has been completed when deciding how much you can borrow and under what terms. This can make this type of financing the only choice if you have a property that is in need of huge amounts of work, or if you are choosing to start from scratch, as many lenders will only give out funds based on the current value of the property or land.
To apply and get the ball rolling is relatively simple and a lot quicker than most loans, with your provider generally ready to dispense the needed funds in just days or weeks. This makes bridging loans the optimal choice if you are in a hurry to get going, making up for the fact that they can be a more expensive option than some of the others on the market.
Many companies look at your credit scores but are more interested in the potential and current value of your property, as this is what will be repossessed should you default on the loan. Experience, expertise and a comprehensive plan and timetable for your development will all help you secure a loan at desirable rates, but even if this doesn’t describe your situation you may still be able to secure a bridging loan. They are intended to be an accessible, simple and speedy solution for most developments looking for financing.
If you are looking for a short term loan to get the capital you need for construction, renovation and even the purchasing of a property, have a look at a bridging loan today and see if it could indeed be the right fit for you.