Bridging Loans London
Bridging loans are the best form of finance for those who are in need of temporary cash flow. In many instances, these types of loans are used for individuals who want to buy a property but are waiting on funds from selling their current home (although, since they’re able to provide short-term funding, they can be used for quite a few different reasons).
Whatever your situation, if you’re looking for a quick way to get a lump sum of cash for a property development in London, you’ll be glad to hear that you’ll be able to apply for bridging finance.
How do bridging loans work?
Just like with mortgages, these types of financial products will require security, which will often be property or assets with a Loan to Value ratio of around 70% (this isn’t a set amount, but rather a guideline for a typical bridging loan).
Having your current property used as security may seem like a risk, but it’ll only be an issue if you fall behind, or renege, on your repayment.
You’ll find that you could get quite a bit of cash from a bridging loan – often ranging from £25,000 into the millions, but this can vary greatly depending on your situation and the lender.
It’s also worth noting that, because they’re short-term, this form of finance can often be quite expensive. If you’re in need of a lump sum of cash quickly though, there’s no doubt that these options could be a worthwhile idea.
Situations where a bridging loan could assist you
Here are just a few of the reasons why you may be interested in getting bridging finance:
- Buying a new property before selling your current one (or while waiting for the money to come through). With the competition in London’s property market, a wide variety of individuals can make use of the additional collateral that bridging loans can offer
- Taking advantage of the market conditions and current investment opportunities. This can allow an individual to finalise their negotiations and make the most of the circumstances, even if they don’t have the cash they need at that point in time
- Repairing broken property chains. These are unfortunately common in London, and a bridging loan could help to provide a solution if a buyer in a property chain drops out
- Paying off taxes. Moving away from other property-related loan requirements, a business could use a bridging loan if they’re in need of a quick cash injection to pay off tax within a limited timeframe
Aside from these 4 examples, there are a variety of different situations where this type of finance could be useful.
Essentially, if you have a deadline coming up and need funds fast (and have security to back up the loan), you could find a bridging loan to be useful.
Do you need an open or closed loan?
There are two forms of bridging loan, both of which can be useful, yet the differences in their criteria can make them worthwhile for a range of situations/individuals.
Often, open loans are best for those who are planning on buying a property but haven’t yet found someone to sell their existing house to.
These may be harder to come by, but anyone who is confident that they’ll make a sale soon should definitely consider their options.
Alternatively, closed bridging loans are only available to those who have already agreed to an exchange with their current home, since it’s unlikely that the sale will fall through at this point.
These tend to be easier to attain since there’s less risk involved for lenders.
Looking for bridging finance in London?
If you’ve got valuable assets, you may find that getting one of these types of short-term loans in London shouldn’t be too much of an issue.
The fact that they can be secured on different forms of property is another huge bonus too, especially when considering that you can often borrow up to 80% of the property’s value.
Better yet, they can be both flexible and fairly easy to understand, making them an even more viable option for many individuals.
All in all, it’s well worth looking into your options if you’re going to need a loan – and we would love to help you out. View our directory of lenders, or check out our bridging loan calculator