How To Get A Bridging Loan

Getting a bridging loan is not so difficult, but many people don’t know how to do it. 

Either they haven’t taken it before or are unaware of it. Knowing the current economic circumstances, you want to get a residential bridging loan. 

You may have cash flow problems or want to sell your old house to buy a new one. 

Whatever the reason, you should keep up-to-date regarding the bridge lending process. 

This article explains the method of getting a bridging loan for various purposes. 

What is a Bridging Loan?

A bridging loan is a form of short-term finance that enables a borrower instant access to funds. 

It’s important to note that the lent money has a monthly interest rate compounded. 

Therefore, you must repay the principal plus the interest amount once your loan term expires. 

In a nutshell, a bridging loan bridges your financial gaps when you dearly need the money and helps you achieve your endeavors. 

Is Bridging Loans Expensive?

There is a general misconception that bridging finance is expensive. The problem is that people see alternative finance from the lens of mortgages. 

They tend to turn their face away from the mortgage term spanning over 20 years or more. 

So, they feel that paying huge sums at one time is more expensive than paying chunks for a lifetime. 

However, the entire rationale behind bridging loans is very different from traditional loans. 

The plus point of these loans is that they help you move fast with money and solve many interim problems that give you sleepless nights. 

So expensiveness becomes a secondary factor when the loan solves your problems. 

In a nutshell, bridge financing is much more progressive and profitable if you take all the dos and don’t seriously. 

How do you get a Bridging Loan?

Here we have explained the process of getting a bridging loan in steps. We have explained everything in detail and with simplicity to help you get the loan without any inconvenience. 

Analyze your needs:

As a borrower, you must have a solid reason. That’s why you have decided to get bridge financing. There are some common reasons people usually have. 

Property Purchase:

Whether you are an individual who wants to buy a new house but lacks the money, or you are a commercial property investor who wants but-to-let finance, here’s the best deal. 

Bridging loans were initially designed to provide money for property purchases. 

Thus, it seems intuitive to go for it if you have the same reason. So far, if we discuss the stats, most people go for it to buy a new house. 

It’s insane to wait months in long property chains, which often end with no result. 

Since you have sold your house and want to buy a new one, the seller hasn’t purchased the new house and is in the chain. 

In such a case, you won’t get the house you desire unless the chain continues. 

Unfortunately, if the seller sells their house to someone else, you will be in great trouble. 

Bridging loans save you from all the hassle and break the chain to buying the house swiftly. 

Business/Auction Purposes:

You may also need money to put into your business in real estate or SME. 

If you have reached a critical juncture where you need money to improve the cash flows or pay bills, you can go for bridging finance UK. 

Similarly, you might be a property investor who buys property at auction and, after refurbishment, sells or rents out the property to tenants. 

If it’s true, you can resort to these alternative loans to get the money quickly. 

Explore a Lender:

There are various lenders in the market. Apart from some high street banks, many P2P lending platforms also give bridging loans. 

Here, you need to find what suits your needs. These lenders have different criteria and eligibility statuses. So, to take the first step, you should get word-of-mouth suggestions from your circle. 

Then, you can see some of the reviews about these lenders. Enquiring at forums like Reddit also helps. 

You must know that each bridging loan is treated differently depending on various factors. 

Nevertheless, getting opinions does not harm. After all, you have to take decisions yourself without external pressures. 

Apply for a Bridging Loan:

Since you have chosen a lender, you want to apply for a loan. Here, you must stop and rethink all the documents you provide to the lender.

Sometimes a broker can help you get the best deals that some lenders don’t provide to individuals. 

In your application, a lender will require the exact data: proof of income, ID, house address, collateral equity, the purpose of loans and much more. So, it’s better to figure everything out properly and beforehand. 

Provide a clear exit plan:

Some factors can be a make or break for your loan. Your credit score and credit history play an important role. 

Similarly, the lender requires an exit strategy that explains how you will repay the loan. 

It gives the lender the guarantee that you are a responsible borrower who intends to repay the loans through a viable process. 

So, you need to remember that the lender isn’t interested in a bad loan, as it can’t carry the baggage of your pending amounts. 

The platforms are wary of a P2P lending website because they don’t think of staining their reputation just because they default or exceed the loan expiry date. 

After checking your data and application, the lender disburses the money into your account. 

Summing up:

A bridging loan can be a suitable option against traditional loans. You only need to know that you should keep track of the whole process. 

This article explains what bridging loans are and how you can get a loan easily in a few steps. 

If you have gone through this article, let us know your feedback in the comments.