What Are the Alternatives to Bridging Finance?

Short-term finance helps you get instant access to money, especially when you need the most. Bridging loans are very popular among these products, but there are some alternatives to bridging finance that you must know. 

It’s good to have a wide range of options on your table to pick and choose the right one based on your preferences and needs. 

It would help you draw holistic meanings from the lending market and make rational decisions that will help you in the long run. 

Therefore, we have provided a detailed introduction to different alternatives for bridging loans. You will find it interesting to know many loan types. Before delving deep, let’s start from the basics.

What are Bridging Loans?

Bridging finance or bridging loans UK are the type of short-term finance that helps you get the money in times of need. That’s what a bridging loan is. 

By definition, bridging finance is a specialized type of lending that bridges a gap between two financial situations to meet your needs. 

We call it specialized finance because it takes a different approach from traditional financial services. 

Why do people look for alternatives to bridging loans?

Everyone has different aspirations regarding lending and financing. People often see the most prominent product in the market when there can help me a slew of options available. 

Alternatives to Bridging Finance:

These alternatives to bridging loans will help you understand many other options for your house purchase, business finding, or any other financial activity. 

Remortgaging:

Bridge financing seems easy to get funds for the property purchase, but sometimes the borrower doesn’t want to enter into a different loan agreement. 

In that case, you can use the same mortgage loans but in a different way. Remortgaging is getting a mortgage again from the same lender or a new lender. 

The main process takes place by releasing your equity in the property and getting instant access to money. 

Remortgaging differs from bridging finance in the time frame of lending and repaying the loan. Often the remortgage on your property takes more time than bridging loans. 

Also, you may know that remortgaging take a long time to complete, so you may think remortgage loans are cheaper. In reality, the more time taken to repay remortgage loans, the bigger the loan becomes. 

Development Finance:

Building a home from the start is often marred with alot of difficulties. The major hurdle that comes your way is finance. You can take bridging finance to get money to develop a house or do heavy refurbishment work. 

However, there is another alternative. Development finance is the best-dedicated loan that helps develop a property from scratch. 

A residential bridging loan is offered in a complete lump sum or the case of refurbishment finance. The lender provides the money for the whole project.

 However, development finance works differently. The lender gives the money in stages. Irrespective of the development stages, you get the money based on the milestones your lender creates. 

Private Investing:

There are a slew of options in private investments to fund your projects. Here private doesn’t mean financial corporations.

 Rather, it means P2P lending, sole or angel investor, or any person willing to give you money at a certain interest rate. 

In the case of P2P lending, the borrower has to sign into Peer-to-Peer platforms. The website will automatically find lenders for you. 

Based on your loan application, the platform will seek the right people to find it. Then after a proper credit check, you get the money through a bank transfer. 

Similarly, an angel investor can provide money based on certain terms. You can see startups coming into the market. 

The reason why they make a mark is that they have got seed investment from angel investors. 

Investors take a leap of faith in the business viability, so they expect profits or dividends. Hence you can fund your business through an angel investor. 

Fast property buying finance:

With the evolution of time or the need to finance house purchases, companies have appeared in the UK and worldwide. 

They fast cash because most buyers or sellers get into longhouse chains and waste their time and money. 

To remove these bottlenecks, house-buying companies have developed new lending facilities. 

Here they buy your house and provide you the money you can use to buy a new house or fund a property. 

In contrast, bridging loans don’t buy houses but secure the property until the lending period ends. 

The fast house-buying firms often don’t provide you with a profitable sum. They give only the 75% of the house value. It means the excess 25% goes into their pockets. 

So, it would be best to decide whether you are satisfied with a lesser amount of money or if you can wait for some time to get bridging finance. 

Final Words:

Bridging loans are becoming a mainstream form of alternative finance. As compared to others, they seek more traction. 

It’s true because bridge financing provides matchless services to individuals. On the otherhand, it’s certainly not true that bridging loans are the only true specialized finance. There are various other types. 

In this article, we have explained some of the best alternatives for bridging loans. We hope this article will help you diversify your lending options.