When would someone need a bridging loan?

An increasing number of individuals and businesses use bridging loans to benefit from the unique short-term financing solution and flexibility they provide. The funds allow people to take advantage of opportunities that arise, secure property deals (some properties at discounted prices) and also to resolve emergency situations, which they would have otherwise been unable to do.

What are the most common usages for a bridging loan?

Bridging loans are used for a wide variety of reasons, including:

For homeowners and other property owners

Quickly securing a property
People can buy a new property before selling an existing one to prevent them from missing out on a particular property they want to purchase.

Repairing a broken property chain
The loan can prevent a homeowner from missing out on purchasing their new home if a buyer in a property chain drops out.

Building a house
People wishing to realise a dream and build their own home. Downsizing These property owners do not require a standard mortgage but can use a bridging loan to buy before the sale of their existing property so they can move quickly and independently.

Converting a barn (or other property)
or people wanting to live in peace and tranquillity in the countryside or for developers looking to turn a profit.

Auction finance
For people buying property at auction, bridging finance can allow them to pay the required percentage needed as a deposit and then complete the transaction in the time provided for by the auction contract.

Temporary cash flow cover
Borrowers looking for a short term loan during a property transaction can use a bridging loan as a quick cash injection.

For property developers and investors

Un-mortgageable properties
Bridging loans can also be used by to develop dilapidated properties, where traditional mortgages would not be approved, for example, where properties have no bathrooms, toilets or kitchens.

Renovation and development
The funding option can be used by those wanting to renovate a property, or those wanting to develop a piece of land into one house or even multiple houses.

Quick access to funds
Bridging loans can be used to take advantage of market conditions and discounted investment opportunities, helping to finalise negotiations so that those opportunities are not missed.

For businesses

Raising capital
Bridging loans can be secured against land and property so that companies can raise the sums of money needed in a short timeframe, for example, buying stock as an alternative to asset purchase finance.

Tax liabilities
Businesses can use bridging loans if a tax demand is made, and the amount cannot otherwise be accessed within the required timeframe.

Meet business obligations
Borrowers looking for short term funding to meet business obligations and payments or overcome financial difficulties can use a bridging loan as a possible short-term option.

For most individuals and businesses, bridging loans are used at times when there is a temporary cash flow issue or a tight deadline, where a quick, short term loan is required to rectify the situation or provide a viable financial solution.

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