Expert Advice: Should You EVER Get a Bridging Loan? 7 Crucial Things to Be Aware of

Gary Hemming, with over two decades of expertise in loans at ABC Finance, brings to light the crucial aspects anyone considering a bridging loan should ponder. Bridging loans, though a swift avenue to secure funds, entail significant financial considerations. Here, we encapsulate Gary Hemming's sage advice into seven pivotal tips to guide you through the bridging loan process.
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1. Comprehensive Market Comparison

First and foremost, invest the time to understand the market and the plethora of bridging loan options available. Utilize tools like ABC Finance's free bridging loan comparison to get a grasp of rates and fees tailored to your situation. Remember, the headline rates often advertised may not apply to all, making personal consultation or using a broker vital to uncover the best deal. The variance in costs between lenders can mean a difference of thousands, making this step non-negotiable.

2. Know the Fees Inside Out

Gary Hemming, Financial ExpertGary Hemming, Financial Expert
Gary Hemming, Financial Expert

Understanding the fees associated with bridging loans is paramount. These can vary widely between lenders and can significantly affect the overall cost of your loan. By getting a clear picture of these fees upfront, you can make a more informed decision and avoid any unpleasant surprises down the line.

3. Prioritise Your Repayment Strategy

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Before diving into a bridging loan, have a crystal-clear repayment plan. Whether it's through the sale of the property, refinancing, or awaiting due funds, your ability to repay the loan on time is critical. Opting for a loan term that realistically reflects your financial timeline can spare you from unnecessary penalties or financial strain.

4. Exercise Caution with Loan Terms

When selecting your loan term, resist the temptation to choose the shortest possible period without considering the feasibility of meeting this deadline. Real estate transactions and refinancing processes are prone to delays, making flexibility and realism in your loan term crucial.

5. The Importance of Choosing the Right Solicitor

The solicitor you choose plays a pivotal role in the bridging loan process. Opt for a solicitor experienced in handling bridging loans to ensure a smooth, efficient legal process. Your solicitor will be your primary guide through the loan's legal intricacies, making their expertise invaluable.

6. Service Standards vs. Cost

Weigh the lender's service standards against their costs. If time is of the essence, a lender known for rapid processing might be worth the extra cost. Conversely, if cost-saving is your priority, ensure this doesn't compromise the loan's timeliness or your ability to meet your financial deadlines.

7. Your Safety Net: The Exit Strategy

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The cornerstone of your bridging loan journey is a well-thought-out exit strategy. This isn't just about having a plan in place; it's about ensuring your plan is robust, viable, and adaptable to potential market shifts or unforeseen circumstances. Your exit strategy is what safeguards you from the pitfalls of bridging finance, making its meticulous preparation non-negotiable.

Following these seven pieces of advice from bridging loan experts at ABC Finance, individuals looking to explore bridging finance can approach their financial choices with a heightened sense of awareness and security, making well-informed decisions that best suit their circumstances.