When Should Bridging Finance Be Sought for Property Development?

Funding a property development project is something that can be approached from a number of angles. Specialist development finance, business loans, various types of secured loans – all readily available for eligible applicants.

But when it comes to fast-access funding for affordable short-term borrowing, a bridging loan can be unbeatable. At every project stage, bridging finance provides a flexible and affordable facility for property developers looking to cover important costs.

A few examples of when bridging finance can and should be sought by property developers:

At the Beginning of a Project

Bridging finance can be great for sourcing the fast-access capital needed to get a project off the ground. Likewise, if you have enough capital to cover the costs of purchasing a property but lack the funds needed to renovate it, a bridging loan could be just the thing.

With bridging finance, the funds can often be accessed within a matter of days. Charged at a monthly rate of interest, often lower than 0.5%, a promptly repaid bridging loan can be hugely affordable.

Typical exit strategies for a bridging loan include selling the property upon completion of the renovations, or transferring the loan to a longer-term facility.

To Avoid Unexpected Delays

Issues and unexpected eventualities can be encountered at any stage as a property development project plays out. Scenarios that could, in the absence of additional financial support, lead to costly delays and disruptions.

With bridging finance, it is possible to secure the fast-access funds needed to overcome such issues with an affordable second or even third-charge loan; with the benefit of rock-bottom borrowing costs when the loan is repaid as promptly as possible.

Bridging finance is engineered to be as flexible and accessible as possible in times of need; ideal for preventing disruptive and potentially costly delays, which could compromise a project’s profitability – if not its viability.

Where a Planned Sale Hits a Snag

The planned sale of a completed property could also be delayed for a number of reasons, something that can prove particularly problematic if all available capital has been wiped out and debts need to be repaid.

These are exactly the kinds of instances where a short-term bridging loan can be worth its weight in gold. A bridging loan can be secured against the development, the funds can be used to tide the developer over in the meantime and the sale can go ahead as planned at a later date.

As the name suggests, bridging finance is designed specifically to ‘bridge’ these kinds of financial gaps.

To Consolidate Other Loans

Consolidation is another popular application for bridging finance. During the course of a property development project, it is not uncommon for a variety of smaller loans to be sourced from multiple providers; all payable at different rates of interest and making it a challenge to keep on top of outgoings.

This is a scenario that can be simplified with an affordable bridging loan. Bridging finance can be used to repay these outstanding debts and replace them with one manageable loan with a more competitive rate of interest.

The full balance on the bridging loan can then be repaid when the project is complete, and the development has been sold. Approached strategically, debt consolidation at the right time and with the right product can lead to significant savings on overall borrowing costs.

To find out more about the available options please visit the website of https://www.bridgingloans.co.uk.

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