Some common bridging loans myths that still get repeated

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Despite strong media coverage over the last year, some myths about bridging loans are still believed by many.

In January 2017, Mortgage Strategy looked at some of these myths or misconceptions, starting with the belief that bridging finance is the last resort, when in fact many businesses use bridging loans as a regular financial strategy.

Bridging loans are often seen as very expensive. While they may be more expensive than alternative loans, competition amongst bridging lenders has resulted in lower rates. Many businesses use bridging loans to raise short-term finance used to generate profits, and save money in the long run.

There is a perception that some bridging lenders are not ethical or sound companies. This may have been true of some lenders in the past, but bridging loan lenders are now professional, abide by financial regulations and provide excellent customer service,

Not everyone realises that there are a number of non-property ways a bridging loan can be used by businesses. Though most loans are used for property purposes, money can be raised using property as security in order to provide development funds for a business, cover seasonal cash flow dips, purchase stock, acquire equipment or even pay a tax bill.

Property developers use bridging finance for refurbishment work, for financing of new developments and to secure properties bought at auctions..

A broker has access to bridging loan providers and can advise on the best way to use a bridging loan.

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