There are many kinds of bridging loans available, which can be used to provide a person or business with short-term finance. Here is an overview how they can be used.
Property loans
One of the most common uses for bridging loans is buying property. They are used by all kinds of people and businesses to help them to quickly get the cash they need to buy a property. An example would be someone who has not been able to sell his or her property, but has seen his or her dream property at a knockdown price. Anyone can arrange a bridging loan to provide them with the money they need to buy their new property while they wait for their old one to sell. Doing so will allow them to move into their new property straight away and pay the bridging loan back once the old property has sold or an additional mortgage has been secured.
A bridging loan is also a way to finance the purchase of an auction property. The auction house and current owner can be paid. Usually, the new owner arranges a mortgage and pays the bridging loan back once they have done so.
Business loans
Many businesses use bridging loans. They are primarily used to help firms with cash flow. A bridging loan is a great way of borrowing the money needed to pay the rent and wages during quiet times of the year. This kind of finance is a lifeline for companies who sell or make seasonal products. They are also a good way to provide a firm with the working capital they need to expand.
This kind of finance can also allow a company to take advantage of business opportunities. They can buy the raw materials they need at a knockdown price when they see special offers rather than miss out and have to pay full price later.
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