How Homeowners Use Bridging Loans to Fund Major Renovations

Usually, turning your house into a dream home is going to take more than just a few design ideas and a vision board. 

The biggest challenge that most homeowners face is the funding that goes into it. Renovations rarely go exactly to plan, and the costs often rise faster than they think. 

This is usually where short-term property loans, known as bridging finance, can help fill the gap. 

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Let’s have a look at how this type of funding works and when it makes sense to use it.

Using Bridging Finance for Renovations

And you plan to add an extension or update the entire layout, traditional mortgage lenders might be a little bit hesitant to actually release funds until the property is classed as Livable. 

Bridging finance steps in in this situation so that you can cover construction costs, materials, and professional fees. When you have the right plan in place, you can renovate your home first and then refinance to a long-term mortgage once the value increases and becomes a Livable property. 

Homeowners often use large bridging finance when dealing with substantial projects like this. It might be the latest form of rebuild, a unit conversion, or even a list of buildings that need to have some specialist work done on them. 

The appeal is speed and flexibility when it comes to this type of finance. The funds are usually available within a couple of days, and you can tailor the repayments to match the timeline that you are dealing with.

Things to Consider Before Applying

Although bridging loans are useful, they are not ideal for every single situation. You need to be careful of this. The interest rates are usually a little bit higher than a standard mortgage because they are short-term in nature.

Make sure you always work out your repayment plan carefully, and you know exactly what your exit plan is before you apply for it. How are you going to pay the money back? In other words, if you plan to sell or refinance, have clear evaluations and timelines in your mind.

Many homeowners work with financial advisors or brokers so that they can compare the offers they have in place and fully understand any fees that may be involved with the transactions.

You should also confirm your renovation plans and ensure that they meet any local regulations and building codes, as experiencing any delays could mean that you will be paying more back.

Why Speed Matters

Home projects often move quickly once you have managed to find the right contractor and materials to actually do the work. Waiting weeks for loan approval can mean that this type of schedule is completely thrown off. 

Bridging finance gives you the agility to be able to move fast, pay any deposits that you need, and secure the materials before they have gone off the shelves. It’s especially useful when you are dealing with a competitive property market where timing makes a massive difference.

Final Thoughts

Bridging finance can be a powerful tool when used wisely. If your renovation plans are ambitious and a little time-sensitive, consider using shorter funding to avoid missing out on an opportunity. 
With the right plan and professional advice, large bridging finance can turn an unfinished property into your dream home for the future.