A Guide To Short-Term Loans

Our guide to short term loans.  Even in a slow market, demand for property exceeds supply as the number of properties coming to the market reduces. In this fast-paced world, securing finance quickly is vital and this is where bridging loan lenders can make a real difference.

Bridging loan lenders

Bridge lenders offer flexible and reliable short-term finance for property buyers to bridge the gap between the purchase of a new property and the sale of an existing one, the sale of alternative assets, or longer-term finance solutions. Bridging finance can also be used a means of raising capital for other uses or renovating or converting a property.

In this blog, we look at bridging lenders and how they can help investors and home movers to achieve their objectives.

1. Understanding Bridging Loan Lenders

Bridging loan lenders are financial institutions, like banks, challenger banks of specialist lenders that provide short-term loans secured on property to individuals or businesses.  These loans “bridge” a gap in circumstances, until the asset or other assets are sold or longer-term finance is secured. Loans are typically short-term, ranging from a few weeks to a few months and interest is not usually paid on a monthly basis, instead being paid at redemption of the loan.

2. The Need for Bridge Lenders

Speed

Bridging loans offer a rapid and straightforward application process, enabling borrowers to take advantage of time-sensitive opportunities, including auction purchases.

Property chains and downsizing

When you are part of a property chain or planning to downsize, the timing of property sales becomes crucial. Bridging loans eliminate the stress of waiting for the sale proceeds and allow you to proceed with the purchase without delays.

Property renovations

Bridging loans can also be used to finance property renovations, making it possible to enhance the value of your investment and potentially secure a better mortgage deal when the property is put back on the market.

Raising capital

Bridging loans can also be secured on property to raise capital for other purposes, such as business investment.

3. How Bridging Loan Lending Works

The loan amount you can secure through bridging lenders is usually based on the value of the property on which it is secured. Some lenders are able to secure a bridging loan on multiple properties

Loan terms are typically short, ranging from a few months to two years. Regulated bridging loans that are secured on a borrower’s home have a maximum term of 12 months.

One of the most important considerations is a repayment plan, or exit route. This is often based on the expected sale of the property or refinance.

Finding the right bridging loan lender

Finding the right bridging loan lender is important as rates, charges and service levels can differ significantly between lenders.

At Alternative Bridging Corporation, we have a strong track record of over 30 years providing bridging finance and offer a range of competitive products as well as more innovative options, such as our Alternative Overdraft product, which provides a flexible drawdown facility where funds can be drawn down and repaid on several occasions.

Contact Us

If you have any questions about how our bridging loans then please don’t hesitate to get in touch with one of our BDMs, email hello@alternativebridging.co.uk or call us on 020 8349 5190.