Property development financing is available in a variety of forms to suit most requirements and budgets. Increasingly, bridging loans are being sought by property developers across the UK to fund large and small projects.
But what is it about the bridging loan that makes it such a popular choice? Why are more investors choosing bridging loans over conventional property development finance than ever before?
Here are some reasons:
- Bridging loans are fast: Bridging loans are one of the fastest-access lending streams available for property developers. From application submission to provision of the funds, it can take as little as 3 to 5 working days, making it an ideal option when time is a factor.
- Bridging loans are flexible: Most bridge loans are tailored to suit the exact requirements and budget of the borrower. Along with flexible repayment terms, it’s also possible to qualify for a bridging loan with a poor credit history, due to bridging finance being far more flexible than more traditional mainstream loans and because monthly payments are rarely required.
- Bridging finance can be used for almost anything: Although most often used for a property purchase, a bridging loan can be used for almost any legal purpose. In addition, it’s also possible to secure a bridging loan against almost any type of property or land, provided it covers the total cost of the loan with sufficient excess.
- Competitive borrowing costs: Bridging loans are short-term loans designed to be repaid within a matter of months rather than years. Interest rates start at below 0.5% per month, coupled with minimal overall borrowing costs. Early repayment is also usually an option with bridging loans without facing heavy penalties or levies.
- Auction property purchases: One of the most common applications for bridging loans in the property development sector is for the purchase of auction properties. The funds required to purchase a property at auction can be made available quickly, with the loan subsequently being repaid in one lump sum when the property is sold or refinanced.
- Purchasing uninhabitable properties: Many mainstream lenders will only issue loans against properties that are considered habitable at the time of the application. With bridging finance, it is possible to secure a loan against an uninhabitable property with the intention of renovating or redeveloping it.
- No deposit is required: Another benefit of bridging finance is that no physical deposit is often required to set up the loan, as additional security can be used to cover this. Eligibility is determined primarily by the value of the property or land used to secure the loan.
For more information on the benefits of bridging loans as a form of property development finance, contact a member of the team at UK Property Finance anytime.