Over the past few years, the bridging finance sector in the United Kingdom has expanded and evolved beyond all expectations. Around six years ago, the collective industry was valued somewhere in the region of £750 million. As of 2017, it is now worth more than £4 billion. But despite such extraordinary growth, misinformation as to what the industry both offers and represents remains widespread.  

Even among those who could potentially benefit from these kinds of financial services, there are significant holes in Britain’s bridging knowledge.

What Is Bridging Finance?

As the name suggests, bridging finance refers to a specific type of financial service/product that can be used to ‘bridge’ a temporary gap or shortfall. More specifically, when a relatively large sum in needed as quickly as possible for a variety of purposes, bridging loans can usually help. Though also available in comparatively small sums, as much as £25 million can be offered in the form of bridging finance – always with a repayment period of two years maximum.  Once again, the idea being that this kind of financing is turned to when facing a very temporary financial shortfall – hence the loan being paid back in full comparatively quickly.

Generally speaking, bridging loans are secured either on business assets or property. As is the case with most other examples of secured loans, the fact that collateral is put on the line means that the application process and qualification criteria are both relatively simple. Not only this, but secured loans also enable bridging loan rates to be brought down to absolute rock-bottoms – typically in the region of 0.5% to 2.0% per month in the case of bridging loans.

How Are Bridging Loans Used?

The majority of bridging loans are used for business purposes and are popular among property investors and developers. For example, should an investor need a substantial cash injection to cover an urgent property refurbishment, purchase a property at auction for an unmissable price or simply find themselves with shortfalls to cover, a bridging loan can be provided in next to no time at all.  

In addition, this type of financing is also proving popular in many other areas of business. One example being the new business startup, where it is relatively common to come across unexpected expenses and financial shortfalls while the business is being established. If a business owner in question is confident that the shortfall will be temporary, they can put up the required collateral and receive the financial backing they need.

But it’s also becoming more common for domestic borrowers to consider bridging loans. For example, if you find the home of your dreams for an outstanding price though a sale on your current property has not yet been agreed, a bridging loan could be ideal. This would allow for the purchase of the new property to go through, with the balance for the bridging loan then being repaid when the existing property is sold.

In the right circumstances, bridging loans excel over and above conventional loans in that they are quicker, simpler and often more affordable. – https://www.bridgingloans.co.uk