There are many bridging loan providers all offering different kinds of loans, so it’s just as well that a bridging loan broker can make the process of finding the best deal easier.
A bridging loan is a short-term loan often used to complete the purchase of property. To apply for one, you can go direct to a bridging finance lender, but you cannot be sure of getting the best deal that way. Most financial experts recommend using a bridging loan broker.
No fixed rates
With most standard loans or mortgages from banks or building societies, it is relatively easy to know what the interest rates are. You can go online or use a price comparison site to get an idea of interest rates.
Bridging loans usually do not have fixed rates, however. A bridging loan assessor looks at each individual bridging loan application and sets the interest rate according to what the assessor feels is the risk level. Different lenders have varying criteria when assessing risk.
A bridging loan broker will be able to conduct an initial assessment of a loan application, and then match the borrower to the lender able to provide the best deal.
There are many uses of a bridging loan and some lenders specialise in a particular area. For example, some lenders specialise in providing bridging loans for purchasing properties at auctions. If your loan is better provided by a specialised lender, the broker will be able to match your requirements to a suitable lender.
Help with the application
For all bridging loans, you will need to provide information and documentation to support your application. The specific documentation required depends on the type of loan. A broker will know exactly what information is needed and the type of supporting documents.
A bridging loan requires an exit strategy, which is when and how the bridging loan will be repaid. The bridging loan can be closed, meaning it has a fixed repayment date, or an open loan that has a flexible repayment date. The bridging loan broker can ensure that the exit plan is realisable and can help you choose the closed or open options.
The longer term
Many people use a bridging loan to bridge the gap until more long-term finance is available. A loan used to complete a house purchase will be repaid after a standard long-term mortgage has been arranged. A landlord can use a bridging loan to buy and renovate derelict property that is not eligible for a standard mortgage. After the building work is complete, a commercial buy-to-let mortgage can be applied for.
A broker who deals with both bridging loans and long-term mortgages can arrange and advise on both. Often, the mortgage will be the main part of the exit strategy, and the broker can make sure that the mortgage funds are ready on the bridging loan repayment date.
For advice on your bridging loan requirements, contact the experts at Ascot Bridging Finance.