It’s common knowledge that when you opt for a loan, it’s best to know its advantages and disadvantages before fully applying. Going in without the proper knowledge can prove to be disastrous for your finances. At the end of the day, each loan has its own specifications, and it can vary from situation to situation.
The same applies to bridging loans. But, what is it about bridging finance that has resulted in vast growth in this sector in recent years?
You may find bridging finance to be an accessible and affordable service, depending on who you are, what you need, when you need the money, and what you need it for. So, whether you’re ready to apply or still looking up options, here’s a quick breakdown of the five major advantages of bridging loans.
1. It’s a Relatively Quick Process
Getting a bridging loan can be an exceptionally fast and effective way to get access to the funds you need. It’s possible for the loan to be paid out in a short span of time. With traditional loans or mortgages typically taking several weeks to underwrite, it’s easy to understand why people in a hurry turn to bridging loans.
2. The Potential is Limitless
When it comes to the purpose of lending money, traditional lenders and banks are very specific. Quite the contrary, a bridging loan can be used for almost any legal purpose without being questioned. As long as the request is for a legitimate purpose then the main consideration is how the loan will be repaid.
3. There’s Room for Flexibility When it Comes to Repayment
Bridging lenders are substantially more flexible than banks when it comes to how and when you pay back your loan. Bridging loans offer far more flexibility in terms of loan duration, how interest is paid, and other factors.
4. The Lending Criteria Are Lenient
The majority of bridging loans are secured by a suitable asset of value, which is normally a home or other type of property. As a result, the rest of the usual lending criteria are no more required. Credit scores, proof of income, current financial situation, and other factors are irrelevant unless you can provide adequate collateral and you have an exit route for the loan.
5. Fees and Interest Rates!
Interest rates on bridging loans are normally higher than that of traditional finance and can be on a monthly rate. However, there are normally no early repayment fees so for short-term requirements. You only pay for the period the loan is taken. Interest can be allowed within the facility so there are no ongoing monthly payments. The lenders will normally charge an arrangement fee of between 1&2% so very much in line with normal loan facilities.
For all of the above, you’ll need the support and advice of an experienced and 100% independent broker. Consider all the options available to you rather than jumping into the first bridging loan you encounter.
Looking to acquire a bridging loan or financial advice for your upcoming business plans? Contact PFN Finance today. We’d be glad to help you.