Bridging finance is applied for when a person or business is in need of raising a large amount of short term finance. An example of when bridging finance will be needed is if a person purchases a house but is waiting for the sale of their old house to go through, the person will apply for bridging finance for this short period in between sales and pay the amount back either straight after the sale of their existing house or within 12 months.
Bridging loans are also used in business and for commercial uses, in the same way as explained above but for commercial premises or land. Other uses in business include providing a business which going through a short term cash flow problem with a much needed boost to get them through the immediate future or until the sale of a certain business.
Applicants of bridging loans must be careful and assess methodically whether bridging finances is the best option for them. Bridging loans carry a higher rate of interest which makes them more expensive than a straightforward commercial mortgage.
The finance company will continue to have a legal right over the property until the full amount is repaid just in case of these defaulting situations. It is therefore essential that the customer is certain that the amount of the bridging finance can be repaid through the sale of the house etc.
If things go smoothly or the finance is a certainty in the short term future, a bridging loan can be a very useful way of raising short term funds for urgent matters with no real problems. Like mortgage brokers, there are commercial mortgage brokers who are experienced in bridging finance who can help individuals and businesses simplify the whole process and find the best deal on the market. People can apply for a bridging loan of various amounts, from £25000. The applicant must assess carefully the exact amount of finance they need to raise.