An Ultimate Guide to Commercial Property Bridging Loans

Friday, April 24

It is easier to get stuck in a property chain than buying a property in the UK. Because what happens when you are relying on a property buyer who’s depending on another buyer who’s interested in a property that’s stuck in a property chain? You become a part of the chain yourself. And it might take months before the chain breaks.

Fortunately, we have something called ‘bridging loans’ in the UK. Bridging loans are an amazing tool that puts money in the hands and pockets of anyone who requires immediate funds. They allow you to get quick financial support to fund your emergencies or short-term requirements.

There are two kinds of bridging loans; residential and commercial bridging loans. Here is everything you need to know about commercial loans.

What is commercial property bridging loan?

While the residential bridging loans are used for buying a personal property where you can reside, commercial bridging loans help you afford a business property.

Also known as property bridging loans, commercial loans allow you to fund your business-related property. From shops to office spaces, you can buy any commercial property using this type of loan.

The best part is, you can borrow as little and as much as you want. With flexible repayment options, you can be the master of your own finances with a little help from an expert bridging loan lender.

How do commercial loans work?

There is no place for traditional lenders in today’s world. Their scheme and eligibility criteria are too rigid to accommodate everyone. They may be good for people with corporate jobs but completely overlook the self-employed people and freelancers. On the other hand, bridging loans can be borrowed by anyone. Therefore, bridging loans are gaining rapid popularity in the UK.

Commercial bridging loans are much more flexible. They put more power in your hands than any conventional lender.
Typically, there are two types of commercial property loans – open and closed. Depending on your need and position, you can apply for either of these using the same documents.

You can usually borrow 70% of the total amount of the security that you provide to us. For instance, if you provide us with your house as security, which costs £300,000, you will be eligible for £270,000.

With commercial loans, you can actually decide your own repayment period. You can either repay the loan within 12 months or whenever you are financially equipped.

What is the typical procedure to borrow commercial loans?

Both the application and borrowing process to avail a bridging loan are fairly easy. If you have an ID and a bank account, you can apply for commercial property loans.

All you have to do is gather the right documents. A bridging loan lender will generally ask you for a proof of identity and proof of income among other essential documents. You would also be required to provide with an exit strategy.

An exit strategy allows the lender to learn about your plan of repayment. Because you are a stranger to the loan provider, you need to prove a practical strategy that will help you repay the loan within the set duration.
Once your application is approved, you can expect your money to arrive in your bank within as few as 15 days.

What can you use commercial property loans for?

Bridging loans can be used by anyone for anything. If you are 21, you can get approved for a bridging loan. It’s that easy!
You can use the money you borrow to buy retail space, industrial spot or a manufacturing unit. You can even use the amount to finance a new acquisition or to cover any other business expenditure.

Additionally, commercial loans can also be used for refurbishing your commercial property or auction purposes. You can also buy plots and pay off salaries or to cover tax payments. Whether it’s an emergency or a planned purchase, property bridging loans are incredibly flexible.

Benefits of bridging loans

Surprisingly, commercial bridging loans come with more benefits than mentioned above. Here are some key advantages of bridging loans.

Solve short-term problems

Commercial bridging loans can be used to literally bridge the financial gap in your business expenditure. Expenses like covering payroll, paying taxes, paying off an existing mortgage or even to buy a second property loan until you are financially equipped to do it without help.

Relatively low interest rates

At first glance, the interest rates might seem higher than what you pay for traditional loans. But since bridging loans are short-term, you end up paying much less than what you would otherwise. The best way to know if the interest rates are reasonable is by calculating the period with the interest amount.

Quick application approval

Unlike with traditional lenders, you can avail a bridging loan in just three easy steps. And sometimes, it may only take as few as 24 hours to get approved. With the right documents, you won’t have to wait for more than a week to determine your eligibility.

Instant transfer

Bridging loan lenders understand what emergencies mean to the borrowers. So, they don’t make you wait too much to make the transfer. Once your profile is approved, you get the funds directly in your account.

Unlimited repayments allowed

Traditional lenders are rigid when it comes to repayments, too. It doesn’t matter if you have the money or not, you are expected to pay your instalments on the pre-determined day. Besides, you can’t pay more even if you have the funds.
Bridging loans are different. You can pay as much as you want. If you want to clear your dues before your repayment period gets over, you have the luxury to do so.

Not obsessed with credit scores

Commercial bridging loan providers don’t check your credit scores before approving your application. So, if you have missed a couple of payments in the past, it doesn’t affect your application.

Self-employed professional can avail the loan

Freelancers and self-employed people get the biggest benefit of this financial service. Because you neither have to produce a proof stable employment nor show your credit score, any 21-year-old working person can avail commercial bridging loans.
Looking to fund your next commercial property? Speak to our financial advisors and get suitable loan options.

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