What Security Can Be Used for a Bridging Loan?

One of the key benefits of bridging loans is enhanced accessibility. True to its name, bridging finance has the capacity to ‘bridge’ many of the gaps in the services provided by major High Street banks and lenders. This is particularly true where collateral (aka security) is concerned, which for mainstream banks is limited to comparatively few qualifying assets.

There are various instances where bridging loans can represent a more convenient, accessible and affordable alternative to a traditional mortgage. An online bridging loan calculator can be used to assess affordability and the available options, before penning an application. At which point, it will be a case of putting up the necessary security to cover the cost of the loan.

But what types of assets are bridging lenders willing to accept? In accordance with your intended application for the loan, what security will you need to put up to qualify?

Buying Properties with Bridging Loans

Bridging loans can be used to purchase all sorts of conventional properties, using the property in question as security against the loan. Examples of which include the following among others:

  • New build residential, commercial or industrial properties
  • Homes or commercial buildings purchased to let out 
  • Properties purchased at auction
  • Multipurpose/mixed use properties

Bridging Loans for Renovations and Improvements

It’s also popular among commercial borrowers and consumers alike to turn to bridging loans to fund property renovations and improvements. Examples of qualifying properties in this instance may include:

  • Barn conversions
  • Refurbishments to sell on at a profit
  • Housing developments
  • Commercial property developments

Un-Mortgageable Properties

Predominantly, bridging loans are immensely popular among buyers looking to purchase properties that cannot be financed by way of a traditional mortgage.  There are several types of un-mortgageable properties that can be bought with affordable bridging finance, including but not limited to:

  • Nonstandard builds
  • Properties in urgent need of repair
  • Residential properties with no kitchen
  • Properties with no bathroom
  • Buildings to be repurposed

In all such instances, it is highly unlikely that any major bank or lender will offer a mortgage against the property or development in question. With bridging finance, there’s far greater flexibility. Hence, even if your application has been turned down on the High Street, you could still qualify with a bridging loans specialist.

The Benefits of a Bridging Loan

Irrespective of the nature of the property you intend to purchase and its intended use, the benefits of bridging finance are universal. Along with monthly interest rates often lower than 0.5%, it’s possible to access the money you need via bridging finance within a matter of days. This makes bridging finance the ideal option for purchasing properties at short notice, or taking advantage of unmissable opportunities at auction.

If you are unsure as to the legibility of your assets, a specialist broker can help.  Rather than taking your business directly to any specific lender, you’ll save time and money working with an established and experienced broker.

Getting a Good Deal on Your Bridging Loan

If you’ve decided to go ahead with a bridging loan application, it’s up to you to ensure you get the best possible deal. In terms of security, providing collateral that exceeds the loan amount to a significant degree can result in lower overall borrowing costs. As can agreeing to repay the loan as quickly as possible – ideally within six months.

According to the team at BridgingLoans.co.uk, above all else, using an online bridging loan calculator and working with an established broker should be considered essential. Have an independent broker conduct a whole-of-market comparison on your behalf, in order to find the best possible deal from the UK’s most dynamic specialist lenders.