Things to consider before applying for a bridging loan
Applying for a bridging loan is a decision that warrants careful consideration. Before getting started, it is advisable to use a bridging finance calculator to establish affordability and consider the available options.Getting the best possible deal means ensuring you compare bridging loans from as many specialist lenders as possible.There are three important aspects of bridging finance to consider before applying:
Fees, interest rates and borrowing costs?
It is important to acknowledge that interest rates are not the only costs incurred on a bridging loan. Arrangement fees, valuation fees, administration fees, closure fees may also need to be factored into the total cost. There may also be brokerage fees to pay, depending on the bridging loans broker you work with.Lenders have a responsibility to make all fees and borrowing costs as transparent as possible, however, if you are not 100% confident that you understand exactly how much you will be expected to repay and when, seek clarification from your broker or lender.
Your exit strategy
All bridging lenders will expect to see evidence of a viable exit strategy, before accepting an application for a bridging loan. Coming up with an exit strategy isnt simply about satisfying a formal requirement. It is also about ensuring you can meet your repayment obligations at the time the balance is due.Bridging loans are usually repaid when the project being funded reaches completion. A typical bridging loan example being the purchase of a property, which is sold later and generates the funds needed to repay the bridging loan. Irrespective of your preferred exit strategy, you must always carefully consider potential complications and contingency plans.
Independent market comparison
Getting the best deal on any type of bridging loan means setting your sights beyond the High Street. It also means working with a 100% independent broker who can offer you objective and impartial advice, every step of the way.
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