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From Adviser Guide: Bridging Loans - August 2013

Alternatives to bridging loans

Depending on the circumstances the borrower may also wish to consider mortgage finance.

By Emma Ann Hughes | Published Aug 22, 2013 | comments

Depending on the circumstances the borrower may also wish to consider mortgage finance, or alternatively business owners may also be able to raise capital using asset finance such as that secured against vehicles, plant and machinery.

Rob Jupp, incoming chairman of the Association of Bridging Professionals, states Bridging loans should not be seen as an alternative to conventional mortgage funding.

Mr Jupp says Bridging loans were definitely not suitable where the client has failed to obtain mortgage funding.

“This would leave the client exposed to a situation where they could be forced to sell their property to repay the bridging loan. However, in some cases, it may be that alternatives exist by way of conventional term mortgages, secured loans or even commercial lending.

“Some lenders have innovated and come up with ‘bridge to let’ products, which combine a four-month bridging loan, with a guaranteed buy-to-let exit mortgage after four months, with no additional valuation or legal fees.”

Danny Waters, chief executive of Enterprise Finance, says the bridging loan is a unique product and there are not any other products on the market like it.

“No other financial product can give borrowers access to potentially sizeable funds in a matter of days. Bridges tend to start at around £30,000 and have no maximum limit.

“OK, you can always remortgage or take out a secured loan to raise capital but these will take far longer to arrange. The bridging loan is a singular beast and can be arranged within days.”

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