Home Credit & Debt How Developers Can Use Bridging Loans to Their Advantage

How Developers Can Use Bridging Loans to Their Advantage

Bridging finance offers a convenient and cost-effective alternative to more conventional High Street loans. It can be a particularly useful facility for property developers and investors looking to construct or purchase properties to be sold for profit.

While there are countless funding solutions available for property developers, bridging loans have become the preferred option for many. For a long list of applications, bridging finance can be significantly more affordable, flexible and accessible than any comparable commercial loan.

Fast-Access to Significant Sums

One major advantage of bridging loans for property development purposes is the speed at which the facility can be arranged; from the time of the application submission, it can be as little as three working days until the funds are released. It rarely takes a bridging loan application more than two weeks to be underwritten and completed, exponentially faster than most commercial loans.

This can be particularly useful for time-critical property purchase and development opportunities. A residential or commercial property can be purchased and refurbished using a bridging loan, before being sold at a profit. The funds can then be repaid in a single lump-sum and the remaining proceeds retained.

Funding For Non-Standard Properties

A common issue encountered by property developers and investors is lending against non-standard properties. This is a classification that includes dilapidated homes and commercial properties, uninhabitable properties, structures in need of major refurbishment and properties that are made from non-standard materials.

These are often the types of properties that can be purchased at comparatively low prices, in order to be renovated and sold on at a profit. As bridging finance can be secured against almost any type of property, it is often the only realistic option available for these types of investments and development projects.

Accommodating Eligibility Criteria

Bridging loans differ from most conventional forms of finance where eligibility concerned; with finance for property development purposes, only two things matter to the lender:

  1. The availability of eligible assets to secure the loan

  2. Evidence of a viable exit strategy for loan repayment

If these two requirements can be satisfied, the applicant is almost guaranteed to qualify. Even if they have a poor credit history and no formal proof of income, they may still be able to access the funds they need to cover the costs of their project.

Cost-Effective Short-Term Borrowing

Short-term borrowing has connotations with being notoriously expensive. With bridging finance, it is actually quite the contrary; interest payable on a bridging loan can be as little as 0.5% (or less) per month. This in turn means that the faster the loan is repaid, the more affordable the facility becomes.

For property developers and investors, covering short-term costs and financial ‘gaps’ in an affordable way is often challenging. A bridging loan taken out over a few months and repaid promptly can prove significantly more affordable than any comparable form of commercial finance.

Speak to a reputable broker today, like UK Bridging Loans.

Craig Upton

Craig Upton supports UK businesses by increasing sales growth using various revenue streams online. Creating strategic partnerships and keen focus to detail, Craig equips websites with the right tools to increase traffic. Craig is also the CEO of iCONQUER, a UK based SEO Firm and has been working in the digital marketing arena for over a decade. A trusted SEO consultant and trainer, Craig has worked with British brands such as FT.com, DJKit, UK Property Finance, Serimax and also supported UK doctors, solicitors, builders, jewellers, to mention a few, gain more exposure online. Craig has gained a wealth of knowledge within the digital marketing space and is committed to creating new opportunities working with UK companies.