5 Major Uses for Bridging Loans

Buy to Let Mortgage Specialist - Wattsford Commercial Finance

A Bridging Loan is exactly what the name suggests, it predominantly supports individuals or companies with funds whilst bridging from one stage to the next.

Generally speaking, most bridging loans last between 3 and 18 months, some may continue for 24 months. They’re recognised as a short term loan product, with many repayment options. They can offer the opportunity to meet current liabilities .

In the vast majority of cases, bridging loans are advanced to clients who are exchanging on large investments, such as buying at auction, buy to let property, commercial property and even equipment. With these large investments delays and problems occasionally occur, this is where a bridging loan can support you by giving you the ability to progress.

Popular ways of using a bridging loan

Purchasing a property

Purchasing a new property is a big investment. From time to time there may be delays in the chain, for example purchasing a property while waiting to sell another will require additional cash which can be paid back when the initial property sells.

Buying property at auction

Auction property purchases are very popular, however it can take a significant amount of time for the mortgage process to complete. Auction payments need to be paid within 28 days after the initial purchases and the conventional mortgage process can cause a lot of stress to the buyer.

Short-term refinancing

Frequently used particularly by landlords who have tenants coming towards the end their tenancy agreement and terms for their existing mortgage arrangements are nearly up. To avoid hasty decisions a bridging loan could be used with the aim to source a new tenancy before securing a new mortgage.

Working capital

Bridging loans can also help businesses with their cash flow. For example a company may be looking raise equity from selling shares, a bridging loan can be used to cover the day to day running of the business.

Buying commercial assets

Large investments are likely for some businesses, such as machinery, IT equipment and tools are necessary assets to operate. If cash flow is low and other loans are not necessarily right a bridging loan can be secured and repaid within a fixed time frame.

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