4 Important Things To know Before Applying For A Bridging Loan

The world's economic recession encourages many people to overcome their bad credit issues. It also motivates them to tackle their financial problems because these circumstances make it difficult to get the necessary funds and fulfil their financial needs. With the growing inflation and recession, individuals and businesses started looking for quick and easy access to funds. Luckily, they can get help through a bridging loan. It is a short-term loan and can be used for any legal purpose. 

Individuals with bad credit have more challenges in obtaining standard bank loans. They struggle more to get funds to purchase property and refurbish homes and mortgages. If you are one of them, the good news is that you can also receive bridging finance. However, you may have to pay a high-interest rate. You can also get loans from reputable p2p lending platforms running online. In this article, we are going to describe 4 tips for those who want to secure bridging debt from a p2p platform.

1. Bridging Finance Is A Short-Term Solution   

Bridging loans are a short-term funding source for those who need funds to fulfil their emergency financial needs. These loans provide you stability during the property purchase period. You can use it to complete the [purchase of a property before the sale of an existing one. Or even in emergencies like when you need to prevent your home from repossession. These funds help you stop the transfer of your home to someone else's name.

The peer-to-peer lending platforms offer bridging loans that can be tailored according to the needs of borrowers. 

With the help of this loan, you can also start a property development project and start making money. You get access to funds in a short time and start using the money as soon as the lender transfers it to your bank account. Afterwards, you can repay the loan amount according to the lending terms and conditions so that you can gain full benefits from it. 

  

2. Effective way To Gather Funds  

Gathering funds in this manner is convenient, simple and speedy. The loan terms usually range from 3 months to a year depending on the lender you choose. Some lenders also offer longer terms to meet the needs of borrowers. 

The p2p lending platform offers loan terms matching your needs. 

You can secure bridging finance within a short period. However, you should keep in mind that these loans are typically more expensive than standard bank loans, with interest rates as minimum as 2% per month. Other charges like arrangement fees, valuation fees and legal fees also add up to the cost and make it an expensive way of borrowing. 

3. How To Take Out A Bridging Loan?

Before applying for a loan, make sure to research and shop around so that you can find a reputable p2p lending platform that is also FCA-regulated. These platforms understand your circumstances and help you in choosing the best option available. 

The peer-to-peer lending platforms specialise in providing affordable bridging loans. Their teams of experts can describe the loan terms in detail. Thus, they can give useful tips on the lending process along with other helpful information. Ultimately, it helps you in completing the loan application. Also, these platforms access the creditworthiness of the borrowers and let them know if that bridging debt is suitable for them.

You do not need to worry even if you have prior unpaid mortgage payments in your credit history because you still have a chance to qualify for a non-status category bridging loan. But in most cases, you have to use your property as collateral.  

If an applicant meets all the basic requirements, they can easily obtain a loan regardless of their current income or credit history. 

Read More :  The Pros and Cons of Bridging Loans

4. Bridging Loans Provides Several Benefits

When you choose bridging finance over the mortgage or traditional property loans, you can get the following benefits: 

1. Quick Arrangement: 

Applying for a mortgage or remortgage can take longer than bridging debt. Moreover, after getting approval, you can transfer funds to your bank account within two to three days. It helps you in meeting your financial needs and get more time to secure long-term funding. 

2. Flexible Repayments: 

Bridging lenders offer many benefits to borrowers, and flexible repayment is one of them. You can pay the interest rate monthly or at the end of the loan terms. While in a mortgage loan, you do not find such flexibility. Bridging loans are usually of two types, i.e. open and closed bridging loan. In an open bridging loan, there is no fixed repayment date which means you have no repayment pressure until the repayment period is not over. 

3. Other Reasons: 

Most banks do not offer loans to cover tax payments or mortgages for investors who have bought any uninhabitable property. However, with bridging finance, your purpose of taking out the loan remains unaffected as long as you can convince the lender that you are able to repay. P2p lending platforms also offer loans if your project involves a non-standard uninhabitable property. 

Thus by choosing bridging finance, one thing is guaranteed you will get the money you need even if your credit score is below average. 

Conclusion

Bridging loans provide individuals and companies quick access to cash, while mortgage and bank loans take a long time. If you struggle to take out a loan due to bad credit history or are a new business, it is worth considering bridging finance. You can find many p2p platforms offering these loans, but you should always choose a reputable platform that the Financial Conduct Authority authorises. It can help you in getting the money you need without damaging your credit score. We hope this article will help you get the right funds to overcome your financial problems.