May 2018 - First 4 Commercial

Open Bridging Vs Closed Bridging Finance

Like any other kind of finance today, bridging loans are often more complex than they might appear on the tin. For example, did you know that you get two different forms of bridging loan; open, and closed?

A closed bridging finance deal is one where the lenders knows exactly what will be paid back, and when. It’s known to them how you will manage the payments, and it will make it much more likely for you to get the loan if you can provide the ample needed proof. They are usually more specific and secured, and thus come with the benefit of lower interest rates for being able to prove that you fit in with their criteria.

It’s less risk to the borrower, and thus is a very popular option for those who can provide the needed information

An open bridging loan, though, is very much different. Open bridging is available for those without a clear exit strategy. You don’t need to know exactly the path you will take to pay it off; you need only secure a date of repayment.

Most of the time, this will be seen as a higher risk option for the lender and thus they may choose not to give you the investment. That’s usually also tied in with the fact that you would be expected to pay the loan back at a quicker period of time than beforehand or risk paying large fees for missing your payment date.


Bridging Loans with Bad Credit Scores

Like any other form of loan, the chances of your success when it comes to securing a loan comes down to your credit score. Someone with a bad credit score, naturally, might struggle to get the kind of finance that they would have been hoping for.

Therefore, those with poor to mediocre credit scores often avoid even attempting to go for something like a bridging loan. You can, though, get a bridging loan even with a poor credit rating; there is no set-in-stone pathway to decide if you are eligible to receive a bridging loan or not. Often, it’s decided on a case-by-case basis, which should make it easier for you to be successful in your application.

The first thing that you need to do is speak with an expert financial advisor. They can take a look at the strength of your credit, and help determine if you are likely to be seen as a successful candidate or not. For example, you might be in good present financial health but have a chequered history.

If you could show the lender that you have a legitimate exit strategy that allows you to pay the loan off with ease, then bridging loans can be secured even with poor credit. It’s all about making up for the deficit in trust that a poor credit history creates by being able to show where you will make up that shortfall.

With expert assistance, this isn’t as challenging as it sounds.


Can Landlords Receive Bridging Loans?

In this modern era of financial short-termism, it’s not uncommon for a landlord to need a cash flow gap fulfilled. While many options exist to fill that hole in the books, one of the best and most proven solutions around at present is that of a bridging loan.

Bridging loans are very popular, offering you all the help that you need to make the right call on your financial shortfall. They usually allow you to pick up a small-to-medium sized loan to cover an investment or a realistic cash flow issue.

A landlord might find use for a bridging loan if they need help:

  • Making up the cash needed to add a new property to your portfolio.
  • Refurbishment and property upgrades to improve portfolio value.
  • A fast-acting solution that can help you to meet your debts and pay off costs.

They often provide landlords with an easy way to secure short-term finance with the promise of repayment. So long as you can provide an exit plan – a provable range of solutions that shows off how and when you will pay back – you can often secure low interest rates to make your bridging loans more affordable to receive.

Either way, you might find that a bridging loan will solve the problem that you face. With buy-to-let mortgages no longer as prevalent as they once were, it’s important that you can seek out alternative forms of investment. With bridging loans, you can find the perfect solution to do just that.


Is Bridging Finance My Last Resort?

For some reason, the concept of a bridging loan – a short-term loan to cover a cash flow issue that can be corrected shortly – has become increasingly confusing. Many people imagine, for example, that a bridging loan is the last resort, the kind of finance that you only go for when nothing else is available.

To say that is true, though, would be a massive disservice to what has become a very popular means of financial security. They are actually very smart solutions which can help you out of a tough spot momentarily. Market challenges can strike us in all manner of different ways, and one of the most common issues that you might find is short-term cash problems.

With a bridging finance loan, you can cover that shortfall with relative ease. It allows you to get a much more reliable means of securing the cash that you need immediately. It has become a very popular means of loan for good reason; it covers a more favourable loan period. It’s viewed on its own merits each time, too, rather than trying to make you fit into a very specific loans structure.

For that reason, it should often be a first port of call when you need a specific sum and want to avoid borrowing an excess of cash, or you wish to avoid paying the loan over a long period of time.

Either way, you’ll find that bridging finance is far from a last resort.

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