What can bridging loans be used for?
Bridging loans can be used for a wide range of purposes, including:
- Property purchases: Bridging loans can be used to purchase a new property before an existing property is sold. This can help to secure a new property quickly without having to wait for the sale of an existing property.
- Property development: Bridging loans can finance property development projects, such as renovations, refurbishments, or conversions. The loan can cover the project’s costs until completion and can be refinanced with long-term financing.
- Development exit: Development Exit finance, also known as a ‘marketing bridge’, is often used by clients approaching the completion of a project and needing time to sell. It’s not always possible, or can be costly to extend your development finance, and a short-term loan may be the solution at a lower cost.
- Auction purchases: Bridging loans can finance purchases made at property auctions, which often require a quick completion. If you buy a property at auction, you will have 28 days to pay the remaining balance and complete your purchase. Short-term finance is often used as, by its nature, it ‘bridges’ the gap between purchasing and securing longer-term finance. It can purchase residential, semi-commercial and commercial property and land.
- Chain breaks: Bridging loans can be used to bridge a gap in a property chain. For example, if the sale of a property has fallen through and a new property has already been purchased, a bridging loan can be used to complete the purchase of the new property.
- Home improvements: Bridging loans can fund home improvements or extensions. The loan can cover the project’s costs until completion and can be refinanced with long-term financing.
- Refurbishments: Are you looking to purchase a property, add value through a refurbishment and then sell or retain it for rental? Is the property not currently mortgageable or requires planning permission to convert to an alternate use? Lenders in the short-term finance market have created products that work with and for you to complete your projects and build your portfolio.
It’s essential for borrowers to consider their financial circumstances carefully and needs before taking out a bridging loan and to work with a reputable lender or broker who can provide clear and transparent information about the terms and conditions of the loan, as well as any associated fees.
How can Sterling Commercial Finance Help?
At Sterling Commercial Finance, we’ve been helping businesses access funding for over 20 years. Get in touch with the team today to see how we can help your business.