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Why Is Refinancing So Popular?

Why Is Refinancing So Popular?

You have likely heard about refinancing before. However, the term seems to be getting more attention recently.

The huge rise in refinancing’s popularity is likely due to its numerous benefits when you’re not yet ready to exit your development finance or bridging loan but the term’s nearing its end. This guide will explain refinancing’s recent rise in popularity and the role played by COVID-19, and other factors in creating this reality.

Refinancing Explained

Bridging loan brokers, Finbri, have revealed that refinancing can help you to receive traditional funding, sell assets, and finish your project. You can accomplish all this even if your bridging loan or development finance term is ending.

Refinance loans are forms of loans that help you settle past debts by accessing a new source of funds. People refinance for numerous personal reasons, but this option is a go-to for many whose loan terms will expire before they can sell or access extended finance.

Refinancing’s Recent Boom

Many financial experts agree that the combined effects of Brexit and COVID-19 are largely responsible for refinancing’s recent boom nationwide. The UK has been significantly affected by Brexit and the pandemic in various ways ranging from immigration to commerce. Additionally, these two factors are responsible for the compression of project timelines nationwide. Thankfully, you can rely on refinancing as an effective solution in this situation, as long as you use it appropriately. Refinancing can take some of the burdens off your shoulders and ensure that your project moves forward without any hindrances.

Longer construction time frames can also be attributed to material supply problems and labor shortages. Therefore, many projects surpass the initial time and cost estimates. The effect of this delay in timescales can become expensive quickly. Many people facing this problem understandably go in for refinancing loans to navigate this challenging period.

Although all developers feel the combined effects of the pandemic and Brexit, bigger ones can cope better. This reality is because they have access to strong supply chains. On the other hand, small to medium-sized companies face huge challenges and are disadvantaged. These enterprises lack the robust supply chains that bigger developers can access. Therefore, there is an even more urgent need for ready cash, and thanks to refinancing loans, these small to medium-sized enterprises can readily access the money they need in days.

The worst of the pandemic seems to be behind us, but the problems highlighted above continue persisting nonetheless. Consequently, experts expect more people to go in for refinancing loans to survive this difficult time. This reality is good news for all lenders, companies, and relevant parties, as long as it is completely the best thing to do.

Wrapping Up

Financial experts recommend consulting your bridging loan provider to get the most utility out of your investment if you are thinking about refinancing.  It is advisable to refinance during this period, but as mentioned before, be sure to consider the pros and cons to determine whether it is the best option for you. A professional advisor can help you consider refinancing’s advantages and disadvantages in relation to your unique needs, so it is best to consult one first before proceeding.

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by Marissa Collins //

Opinions expressed by contributors are their own.