When taking out a bridging loan it is vital that you are fully prepared and have an exit plan in place for when it is time to repay the loan. A bridging loan is only ever intended as a short-term financial solution when cash flow is required to complete a transaction. This could be to fund the purchase of a property at auction, to secure funding for construction or refurbishment costs, or to grow a business.
If you are unable to repay a bridging loan in full when the time comes you will be placed in default, which brings with it a whole host of unwanted complications. It is important that you resolve the situation quickly if you fear you cannot pay, in the form of an extension of the loan with your current lender, or refinancing through a new lender.
Exit strategies can be many and varied. In the vast majority of cases it will be in the form of the sale of the primary property that bridging finance has allowed the transaction for, or the sale of other investments. Other exit strategies include refinancing to a long-term mortgage, selling a secondary property, or selling shares to repay the loan.
Always consider the timescale you have and whether the exit strategy you have in mind is achievable and practical. At First4Commercial we have vast experience in helping our clients find the right type of bridging finance for their needs, with advice on exit strategies. To find out more contact our customer service team on 01277 620 083 or firstname.lastname@example.org.