Advantages of Bridging Finance
Bridging finance is a type of short-term loan used to bridge the gap between two loans, typically when buying a new property before a current property has sold. A bridge loan is not always recommended due to the high interest of the loan, but when used correctly in specific circumstances it can be advantageous for the recipient.
Let’s take a closer look at some of the main advantages of bridging finance:
Bridging finance is never long-term, so with a short-term loan there are often fewer risks, as you’re going to pay it in less than year in most instances. In fact, not many bridge loans last longer than year, so it can be paid off in a very short period, usually once your current property as sold or the finance from a mortgage as been cleared.
One of the main benefits of bridge financing is making a fast purchase. Because a bridging loan is cleared very quickly, it allows buyers to purchase a property they may not have been able to because they are still waiting to sell their home or for their mortgage to process, so can avoid possibly losing out on the chance of buying a dream home.
Most types of bridging finance are very flexible, allowing the borrower to pay of the loan in a way that best suits them. This can be in the shape of monthly instalments or paying off most of the loan once the appropriate finances have been acquired.