What other options are there to taking out bridging loans?
When looking for short term finance facilities bridging loans can often be a great option. However bridging loans are not always an overall good finance option, and on some occasions when they are a good option, there may actually be a more suitable finance facility available.
As independent commercial finance brokers we provide various finance options to businesses and investors. In addition to bridging finance we also provide commercial mortgages, asset refinancing, development finance, mezzanine finance, buy to let mortgages, asset loans and invoice finance. As bridging loan alternatives we often provide fast buy to let mortgages, asset refinancing, invoice finance and asset loans.
Bridging loans are usually taken out to solve short term cash flow problems or gaps in finances whilst property or other assets are being sold or a finance facility is being put in place. Since bridging loans are short term methods of finance they are usually arranged for periods of 6 to 12 months. Time can quickly catch us up and if there are problems or delays with the proposed bridging loan exit route this can cause financial worries and problems. Other facilities can also be put in place quickly and can offer longer finance terms, which can help remove pressure in addition to perhaps also being a cheaper alternative to a bridging loan. Asset loans provide another option to raising short term funds. Fast asset loans can also be secured on assets such as cars, jewellery, valuable watches, boats, aeroplanes, antiques and art.
When finance is required to fund new build properties, or extensions and refurbishments to existing property, bridging finance is often a popular funding option. Bridging loans often lend themselves very well to these types of projects, but they may be better funded through the use of development finance. This is because development finance is specifically tailored to fund construction projects. Like bridging loans, and quite often provided through bridging loan providers, development finance is a short term finance facility with terms of up to a maximum of 3 years. In most circumstances more money for a project can be raised through development finance because the facility is arranged taking into consideration the current value and also the end value of the property. This is unlike bridging loans that base their total lending facility on the current market value, although this can be adjusted later as work progresses and the value of the security increases.
The funding for building projects is not all required at the start, but is normally spread throughout the project. With development finance the funds can be released in stages, meaning that interest charges can be saved which makes the project more profitable.