What Can A Bridging Loan Be Used For?- Shortterm

Bridging finance is a short term solution, and as its name suggests, it is used to bridge the gap between your finances. You can use this type of debt for a number of purposes and fulfil your current financial needs. The number of bridging lenders is increasing as more and more borrowers are attracted to bridging loans due to the flexibility and ease that it offers. It offers several benefits, such as flexible lending criteria, quick access to funds, and fast approval. But you should remember that the bridging loan interest rate is higher than the traditional mortgage. Let's have a look at some of the best uses of bridge finance. 

Chain Break Bridging Loan     

One of the most common uses of bridging debt is a chain break. Most individuals use this type of loan to purchase a property before selling existing property. The debt amount is repaid after the sale of the property. There are many situations when you need this type of loan. For example, if your favourite home is on sale in the market, you will need quick funds. Otherwise, you may miss this opportunity. 

Property Refurbishment    

You can also use bridging finance for the renovation or refurbishment of your property. So it can be a perfect solution if you are looking to convert or improve your property to increase its sale value. Bridging lenders accept all types of properties even if the properties are in poor condition and need repair, and you can use it as a security against the loan. You can take out funds for all types of refurbishments, from light to heavy refurbishment. You can also make major structural changes to the property to sell it at a better rate. 

Buying Auction Property   

Another popular use of bridging debt is to purchase property at an auction. Auction is a great opportunity where property investors can buy a property below its market price. And if you win a bid, you have to pay a 10% deposit at that time and complete the remaining payments within 28 days. The Bridging loan is arranged quickly, and you can complete the purchase within the deadline. Bridging Loan Providers also allow you to borrow against non-standard or uninhabitable properties. However, mortgage lenders do not accept the non-standard property. 

Buy-to-let Bridging Loan      

Buy to let bridging finance is also known as the bridge to let, and you can use this type of debt to purchase a property to rent out. It is usually used by property developers and landlords who currently lack funds to complete the purchase of the property. It is an ideal debt to secure a property in a competitive market. When you are waiting for long term finances to get a bridge fund, you need to provide an exit route. The most common exit strategy in buy to let is refinancing. You can also repay the loan by using the rental income. 

Property Development  

Another use of bridge finance is for your property development or building project. It can be used for all types of projects, from small residential building projects to large scale commercial building projects. It means you can take out bridging finance to complete the development of a property.   

Purchase A Land   

You can use a bridging loan to purchase a piece of land. It can include all types of lands such as agriculture, residential, commercial, development sites and land with or without planning permissions. This type of debt is typically used to fill the gap whilst change of use or planning permission is guaranteed. 

Raise Business Finance

Other than purchasing or renovating properties, bridging finance can be used for other purposes, such as raising capital for business. You can get funds to fulfil your business needs, whether you have a small, medium or large business or a limited company sole trader or partnership. Such loans are faster and more flexible than business loans, and you get quick funds to meet your financial needs. Business Bridging Loan Help you to grow your business in a smart way.For example, you can use it to pay wages, expand the business, purchase new stock or equipment, debt settlement, cover overheads or fund other business activities.