Discover Bridging Loans With our Guide to Buying Property

Buying a property has always been challenging in the UK. With the benefit of bridging finance, you can buy a property before selling an existing one. 

People don’t have enough cash to put a huge sum into a house. That’s why they need loans. 

Bridging finance with all its lucrative benefits comes to mind for every seasoned house buyer or investor. Why is it so? 

You are at the right place if you still don’t know how this alternative finance helps you in the property market. 

This article will help you understand how swing loans can be an option to buy residential or commercial property. 

What are Bridging Loans? 

Swing loans or alternative finance are the types of loans that connect two different financial situations with lent money. 

A bridging loan is a short-term money used to bridge gaps while using that money for different purposes. Repayments are done once in a few years term along with interest. 

People have different aspirations with money. In the UK, buying a house is a dream. Knowing the property’s price, you would find it hard to get into this industry easily. 

Thus, bridge financing seems a better option when you don’t have the money and want to purchase something of value. 

Why do people take Bridging Finance for house purchases?

Nowadays, you have seen alot of options to fund a business or buy a property. Out of the many, bridge financing is getting traction nowadays. The total gross lending in the third quarter of 2022 makes around £214.7 Million. 

  

Overall, it shows a positive sign for the P2P lending industry, particularly bridge lending. But why is it so? 

  

We need to understand the current surge in lending in the context of the economic situation in the UK and around the world. 

  

The surge in living prices and rising energy bills can be majorly attributed to the country’s ill-economic prices and the aftermath of the Ukraine-Russia war. 

  

It plays its part in moving the economy to turbulent times and increasing living costs. 

Thus, people would take bridging finance home loans to compensate for their business needs. The same goes for the property market. 

Recent stats show that people would buy property even after higher mortgage rates and surging prices because they fear that the next increase in price would leave them unable to buy houses or to do business. 

As bridging finance provides instant money with little to no red tape, swing loans allow easy access to money. 

Lately, most bridging needs came from chain break this year as people want to purchase property without selling their houses in chains. 

Similarly, it’s important to note that in Q3, 22% of the bridging demand came from chain breaks. 

Now, the time factor is very important. People don’t want to take a bet with time to wait till their house sells, which in most cases doesn’t. 

Read More: Fix A Broken Property Chain with a Bridging Loan

Benefits of Buying Property with Bridging Finance:

There are alot of reasons why it’s good to seek swing loans rather than mortgages or high-street lending. Let’s find out some major benefits of using alternative finance for the property. 

Fast Access to Money:

The instant need for money explains the two basic situations. Partly, people are vulnerable, biting their nails to protect their worth. 

At the same time, people also want to expand their businesses and earn profits. Both things are intertwined. 

Therefore, they seek fast access to money. In such situations, taking a bridging loan from a P2P lending platform or any other financial institution becomes the best choice. 

It may take a few weeks to months to lend money to people who need money. It’s true in the third quarter of 2022. The average completion time of P2P bridge finance is 60 days. 

Comparing the loan completion and the amount of money you get with bridging finance with other high-street loans, you will see the difference. 

No Monthly Repayments:

The biggest pain, having like a sword of Damocles over your head, is none other than the repayments. 

It seems good to take out the money as a loan, but none loves to pay it back. However, you need to take that bitter pill. 

On top of that, the time period and the frequency of repayments also matter. The good thing about swing finance is that you don’t have to pay a chunk of principal plus interest every month. 

More often than, people have additional expenses along with their monthly budget. Therefore, the monthly living costs soar high and put the average household squeezing their primary expenses. 

Also, the rising interest rates have an added effect on mortgage repayments. So, bridging loan providers provide the best advantage to repay the lumpsum in a matter of years. 

It would fend off the monthly repayments, though the overall costs of repaying the bridge finance are much higher than mortgages. 

Flexible Eligibility:

Bridging finance has better prospects for those with a seemingly bad credit score or repayment history, which we essentially call bad loans. 

However, mortgages have a long history of strict lending criteria. It means that even if you have a perfect business plan and are willing to repay the loans, you can get a mortgage. 

The reason is that your mortgage application gets turned down due to your bad credit history. On the other hand, you would not see such tight lending criteria with swing loans. 

Generally, the main idea behind alternative finance is to give freedom to people to make better financial decisions. So, by incentivising people, they come in numbers to grab the opportunity.

Final Words:

Buying a property with a bridging loan in UK would be the best idea nowadays. Barring the expensive loans, you can see and get better benefits from bridge finance compared to other lending options. 

This article gives a bird’s eye view of purchasing your house or developing your property for business purposes. If you have read this article, let us know in the feedback.