Cheaper than bridging
Do you ever need short-term finance? If so, there is a fair chance that bridging will immediately spring to mind.
However, a loan may be a lot cheaper than bridging, and massive savings can be made with the correct approach.
Many bridging loans don’t complete – often because the benefits are not great enough to outweigh the costs – it just doesn’t make financial sense.
But a term loan with no early repayment charges could deliver a better result at far lower costs, which would make the whole project viable.
Here’s a recent example – The client saved a massive £10,000 over a 12 month period:
When considering a £150,000 second charge bridge the borrower saved over £10,000 by taking a term loan, and, unlike bridging finance, it didn’t put them under pressure to refinance after a year.
In this case, the money was needed to complete and sell a development, but the loan was secured on the borrowers’ main residence. Consequently, rather than being forced to refinance, the term loan gave the borrower the required cash flow to roll straight over into the next project without paying another set of fees and costs.
Yes, bridging finance can often happen marginally faster as there is no burden of proving affordability – and there may be no monthly payments to service – But where affordability is not an issue, the interest costs can be more than halved, the need to find an exit is removed, and the costs of refinancing disappear.
On a Regulated term loan, the process is broadly the same but without any involvement by the borrowers’ solicitors, which can so often hold matters up for quite a while – It’s also cheaper than bridging.
So, next time you are thinking of a bridging loan, let me also explore the second charge term options for you.
Remember, second charges can be used for business purpose, tax or for heavy refurbishments – a low-cost second charge facility with the option to settle, or overpay without penalty, could make good sense for you.
Let us say “Yes, we can help” – Cheaper than bridging
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THINK CAREFULLY BEFORE SECURING ANY LOAN AGAINST YOUR HOME