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Bridging Loans Explained

If you need to buy a property quickly, or just raise fast finance, a bridging loan might be your best option. Our guide will explain all you need to know about Bridging Loans so you feel fully informed.

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Bridging Loans Explained

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  1. Bridging Loans Explained by Volo FS https://www.volofs.co.uk/bridging-loan/

  2. What is a bridging loan? If you need to buy a property quickly, or just raise fast finance, a bridging loan might be your best option. Bridging loans are designed to be taken over a relatively short period of time. Loan terms are generally from a few days up to a couple of years, using equity in property as the security. The amounts can vary, with some lenders starting at £25,000 up to multi million pound facilities. They are generally used when finance needs to be raised quickly or on property that a standard lender won’t use as security .

  3. How do bridging loans work? They are secured on property of some sort, with the equity available determining how much can be borrowed. The focus with bridging is normally speed of completion. They can be put in place within days, meaning they are a very flexible way of borrowing money.More expensive than standard loans, bridging is only suitable for short periods of time, where a definite exit route is in place or expected. Some of the benefits these loans have include:

  4. What can Bridging loans be used for? Bridging can be used for any legal purpose. You might want to keep a sale chain together or just move quickly to buy a new property, no matter the situation, we can help find the right loan for you.

  5. What can you use as security for your Bridging loan? Basically, any property can be used as security for a bridge and it doesn’t have to be a house.

  6. What is commercial bridging finance? These are similar to residential loans but are used by businesses for a variety of reasons:

  7. Clear Bills: There are times when an unexpected bill comes in that needs to be cleared before a standard commercial loan can be arranged. • Business Cash Injection: If, for example, a large order comes in, the business may need some quick cash to be able to fulfil for the customer. • Buy Property: Property bargains come along from time to time. Property dealers can secure a discounted purchase price if the sale can be concluded quickly, bridging can help with this. It might also be a property that needs work, or is being developed completely so a standard loan would not be possible. • Stopping Repossession: Bridging can be used to clear arrears on a mortgage to stop a loan being called in, or even clear the whole facility while a long term solution is found.

  8. What are open and closed bridging loans? Open Bridging Loan: This is where there is no definite date for the loan to be repaid. A typical example is where the sale of a property is the method to repay the bridge. It may take a month, 6 months or even a year to conclude when a buyer isn’t in place at the start of the loan term. Closed Bridging Loan: These are for when there is a date set to repay. You might be able to say for sure when you will repay because you’ve already exchanged contracts on a sale or it might be that you have an investment maturing on a set date. Whenever you take out a bridging loan you should always have the exit route in mind.

  9. The application process Applying for loans can be long winded and confusing. To make sure you don’t waste time and money, we do all we can to make the process as easy as possible. At Volo FS, we will have a no obligation conversation about what you need and how we can help you. On that first call we can give you our initial thoughts on the likely loan rates and terms you can expect. We will talk to the most suitable lenders for your case and once we have an in-depth quote we will send you the details. Don’t forget, we deal with the whole market, so your quote will be the best we believe is available.

  10. When we find the best deal for your needs and you would like to proceed, we send you the application form and collect the relevant documentation. If the loan requires a valuation it will be instructed now, as it is key to all loans secured on property. As the loan will be dependent on the value of the property, you can wait until the valuation is back but at this point, when the time is right, solicitors will also be instructed. Once all the relevant information has been submitted to the lender and the legal process has been completed, the funds will be sent to your solicitor and transferred to your bank.

  11. Why wait to save time AND money? Give volo fs a call now, we’ll make sure we get you the best possible loan for your needs. Call: 01492 233 999 Or Email: tim@volofs.co.uk

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