Term loans or bridging loans: which property finance solution suits your needs?

When it comes to property finance, term loans and bridging loans are popular solutions. Both options serve different purposes, and selecting the right one depends on your specific needs and financial situation. Your choice can significantly impact the success of your venture.

What is a Term Loan?

A term loan provides secure, medium-term funding typically structured for three to five years. This option is ideal for businesses looking to stabilise cash flow, finance property improvement, or purchase new assets. One key advantage of a term loan is that it offers stability, with fixed repayment terms and predictable interest rates.

Key Features of the Alternative Term Loan:

• Loan term: 3 to 5 years
• Loan amounts: £250,000 to £2,000,000
• Secured on residential and commercial properties
• First charge over property

A term loan can be a better fit for medium-term investments, such as purchasing an office building or refinancing a property that needs improvement. This product often suits owners who need to manage cash flow while ensuring steady funding for growing operations.

Bridging Loans: A Short-Term Solution

If you need fast, short-term financing to bridge a gap between property transactions or to secure a quick investment, a short-term bridging loan might be your best option. Bridging loans are typically used for up to 24 months, making them ideal for situations where you need fast access to capital for a limited period.

The Alternative Bridging Options:

• Residential Bridging Loans: Ideal for securing quick financing on investment properties
• Light Refurbishment Bridging Loans: Finance for property improvement
• Commercial Bridging Loans: Useful for purchasing or refinancing commercial properties and unlocking working capital
• Regulated Bridging Loans: FCA-regulated loans suitable for homeowners (up to 12 months max)

Key Features of Our Bridging Loans:

• Loan term: Non-regulated up to 24 months; regulated up to 12 months
• Loan amounts: £150,000 – £3,500,000
• Secured on residential and commercial properties
• First or second charge over the property

Which One Suits Your Needs?

Your choice between a term loan and a bridging loan will largely depend on your circumstances and financial goals. Here’s a breakdown to help you decide:

Choose a Term Loan if:

• You need medium-term stability and predictable repayments
• You’re planning significant property improvements or medium-term investments

Choose a Bridging Loan if:

• You need short-term financing for a quick property purchase
• You’re looking to unlock working capital from an auction property
• Fast access to capital is critical, such as in property renovations or securing investments before a sale

Both our term loans and short-term bridging loans offer flexible solutions, and the best one for you depends on your particular needs. By considering your time frame, financial situation, and goals, you can choose the right type of loan for your property finance requirements. Alternative Bridging has been providing property finance for over 30 years and will have the right solution for you.