Bridging loans are short-term loans taken for short periods of between 2 weeks and 3 years pending a much longer financing arrangement. These loans have some advantages over other lending methods due to their nature.
- Bridging loans can be arranged in a short period usually less than 24 hours. However, for the best financing arrangements, it is better to get it after a few days.
- They are ideal for short-term use in emergencies also; there are rarely any early repayment demands or penalties.
- A bridging loan can be secured on more than one piece of property to faster raise the amount of finance required.
- Such loans are flexible and the terms can be tailored to the borrower’s needs.
- Bridging loans are usually used as a way of raising finance whereby other methods would not have worked out so well. For instance, one can obtain a bridging loan on a dilapidated piece of property. Try doing the same to acquire a mortgage and your efforts will bear no fruit.
You should however, be wary of the higher interest rates imposed on bridging loans, to avoid losing your property entirely or ending up with less than you figured you could get.