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Bridging loan applications follow many of the same fundamentals as a conventional mortgage application. But whereas a traditional mortgage can take several months to arrange, a bridging loan can be organised and accessed in a matter of days.

What follows is a brief overview of the four main aspects of the bridging loan application process, which in all instances can be streamlined and accelerated with the support of an experienced bridging loan broker:

The Borrower - Eligibility

For the lender, establishing the credibility of the borrower is the main priority. The borrower will therefore be asked to provide evidence of their financial status, which may include copies of bank statements or tax returns. Some lenders perform credit checks on bridging loan applicants, though a poor credit score will not necessarily be an obstacle in qualifying for a competitive loan.

The Property - Security

Bridging loans are issued primarily on the basis of the value of the assets the loan is secured against. This will almost always be a residential or commercial property, upon which the lender will conduct a full valuation and inspection.  Depending on the type of bridging loan you are applying for, you may be expected to provide evidence of your experience (as a developer or BTL investor, for example), and your current property portfolio.

Loan Purpose - Application

A key benefit of bridging finance is how the funds can be used for any legal purpose whatsoever. Even so, your lender will want to know why you are applying for a bridging loan and how you intend to allocate the funds. This forms an important part of the eligibility checks conducted by bridging lenders and also feeds into the credibility of the borrower’s planned repayment strategy.

Exit Strategy - Repayment

Formal evidence of a viable exit strategy will need to be presented, in order for a bridging loan to be granted. This provides the lender with a clear and reassuring indication of how you intend to repay the loan, which usually takes place in one of the following ways:

  • The property or development the bridging loan funded is sold

  • The bridging loan transitions to a longer-term loan or mortgage

  • The loan is repaid using funds raised through inheritance or sale of assets

The strength and viability of your exit strategy will also play a role in determining the cost-effectiveness of your bridging loan. The more convincing your case, the more likely you are to be quoted a competitive rate of interest.

Advance Planning and Preparation of Documents

The advice and support of an independent broker could prove invaluable, particularly when planning your application and preparing all required documents.

Ensuring you have all the information and paperwork you need at the earliest possible stage will help ensure a smooth and streamlined application process.  This is particularly important where time is a factor - missing paperwork/documentation is the leading cause of application delays and disruptions.

Particularly if this is your first time applying for bridging finance; expert broker support should be enlisted as early in the process as possible.

Author: Craig Upton

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