How To Choose The Right Broker For Your Bridging Loan
So, you need a bridging loan. You should be as well informed as possible. Try to work out precisely what timescale you’ll need the money for and when you reasonably think you’ll be able to pay it back.
Don’t forget, the ideal situation for a bridging loan is where you are confident in knowing when you will have access to the funds to repay the loan eg. the future sale of a property. Your repayment plan is also known as your ‘exit strategy’ because its how you’ll complete the bridging loan. The more organised you are, the more likely it is that a potential lender will give you the loan that you want, as they will be confident that you will pay them back their money promptly.
What are my options for a Bridging Loan?
When considering which option is right for you, think about the following questions.
What are the terms of the loan? Terms can seem pretty similar between lenders, but that is not necessarily true. Make sure you understand precisely how lenders will charge interest and if there are any penalties for early repayment.
What are the interest rates + fees? There are often lots of different costs involved, so it is vital to get expert advice. That way, you’ll be able to properly understand which offer is most attractive and find the best bridge loan rates.
How long is the loan term? For bridging loans, this is usually up to 12 months, although lenders can offer bridging loans for longer at their own discretion.
What loan to value (LTV) are you borrowing at? You may be able to borrow up to 75% of the value of all property you can offer as security (this may allow you to borrow 100% of the purchase price of the new property).
Which lenders are right for your situation? Most lenders have a specialist area. For example, specific lenders have more experience with providing bridging loans for residential homes; others are adept at funding larger corporate projects.
Choosing the right provider
The first place people may begin looking is online comparison sites. Not all providers are listed on price comparison websites and they may not cater for customers with tricky or complex situations. Bridging Finance is a specialist area and it is always best to take advice from an expert in this field. Friends Capital will consider all client’s situations, even if they have poor credit or need to borrow a higher loan to value.
Comparison sites also remove the personal touch. If you are trying to get a loan for a home purchase, the process of deciding on and comparing bridging loans can feel very personal. Sometimes having direct contact with your bridging loan broker can be invaluable. Friends Capital will give you personal advice and tailor the terms of your loan specifically to you.
Some people choose to make financial decisions on things like bridging loans by talking to friends or family members. It can be comforting to work with someone who is recommended, so don’t be afraid to seek recommendations from people you trust for expert financial support.