Bridging Loans: Secured Loans When Time Is Critical

Bridging loans are a specialist type of secured loan that can be particularly useful in time-critical situations. Secured loans in general can be quicker and easier to arrange than unsecured personal loans, but the underwriting process can still be lengthy in the case of larger secured loans, such as mortgages.

Speed is one of the reasons bridging loans have become the go-to finance product for both businesses and consumers in situations where turnaround time is of great importance. When time is critical, there is perhaps no faster or more convenient option available than bridging finance.

You will need to have sufficient security to cover the loan amount, but the application and underwriting processes are generally much simpler than those of other types of secured loans.

Specific instances where bridging loans are considered the ideal alternative to a traditional secured or unsecured loan include:

Fast property purchases

One of the most common applications for bridging finance is purchasing properties at a bargain price before your competition. Whether commercial or consumer, getting a great deal on a property often means snapping it up quickly while the opportunity exists. Instead of waiting months for a traditional mortgage application to be approved, bridging loans can be paid out within a matter of days.

Buying property at auction

The same also applies to properties that go under the hammer at auction, which can often be purchased for well below their market value. The only proviso is that you rarely have more than 28 days to pay for the property in full. This timeframe is often out of the question with traditional mortgages but perfectly possible with a bridging loan.

Urgent business expenses

Businesses can face unexpected outgoings and/or higher-than-expected costs. Unfortunately, these unexpected costs often arrive at the worst possible time. There are countless applications for bridging loans in a business environment, i.e., urgent tax payments, critical business equipment replacements, etc.

Avoiding repossession

The importance of urgent action to avoid repossession needs no explanation. The prospect of losing your home or business property can be a terrifying prospect, but bridging finance can be used to quickly rectify the problem. Bridging finance can be used to repay repossession debts, enabling the owner to retain full control of the property and its destiny.

Probate and inheritance tax problems

Time can also be a factor when it comes to probate and inheritance tax issues. Bridging finance can be used to meet the tax obligations, allowing the applicant to realise the inheritance.

We recommend that you always seek professional, independent advice if you have any concerns or questions regarding probate and inheritance tax issues.

Property repairs and updates

If the property where you live or let falls into disrepair, you may be legally (or at least ethically) obliged to bring it back into line. Depending on the nature and severity of the issue, immediate and extensive repairs may be necessary. In this case, a bridging loan could be an ideal short-term solution for correcting problems before they are allowed to deteriorate further.

Buy-to-Let purchases

Bridging finance can also be perfect for extending a buy-to-let property portfolio. If and when the perfect property is found at the right price, rather than missing out on the investment opportunity of a lifetime, one or more of your existing properties or even the new property can be used as security for bridging finance, enabling you to purchase and expand your portfolio within a matter of days.