All bridging loans are bespoke facilities, with flexible terms and conditions to suit both the issuer and borrower. Even so, most bridging loans share a number of similarities, with regard to how they work and who can qualify for bridging finance.
Typical features of bridging loans include the following:
• Loans available starting from £50,000 with no upper limits
• A bridging loan can be arranged within a few working days
• Interest applies monthly at rates starting from just 0.5%
• Full loan balance to be repaid within 1 to 18 months
• Funds secured against assets of value, usually residential or commercial property
• Minimal additional borrowing costs and no early exit fees
• Can be used for any legal purpose whatsoever
• Open to applicants with poor credit or a history of bankruptcy
• No proof of income necessary and no deposit payable
Getting an initial quotation for a bridging loan is fairly straightforward. Simply enter how much you need to borrow and your preferred repayment term in an online bridging loan calculator, and you will be returned with a quick quotation.
But if you would like a more formal quotation from a bridging finance specialist, you will need to fulfil a handful of basic requirements. Lending criteria is not nearly as strict with bridging finance as with conventional loans, but borrowers must nonetheless meet the following requirements to qualify:
• Provision of formal proof of identification and residency
• Independent valuation of assets to secure the loan against
• Convincing evidence of a viable exit strategy
• An overview of how the funds will be allocated
• Evidence of relevant experience in the field
Each of the above will form the basis of your application, with regard to whether or not you will be considered eligible for bridging finance.
After which, there are additional factors that will influence the affordability of the loan you are offered, if your application is accepted.
Examples of which include the following:
Your Credit Score
Poor credit will not necessarily count you out of the running for a competitive bridging loan. However, the vast majority of bridging finance specialists conduct credit score checks as a standard part of the application process. The better your credit score, the more likely you are to be offered a competitive deal with low overall borrowing costs.
Financial Position and Income Level
The same can also be said for your financial position and income level at the time of your application. Neither of which will necessarily see your application rejected, but could have a major impact on the affordability of the loan you are offered.
Open vs. Closed Bridging
A bridging loan with a provable exit strategy is referred to as a ‘closed’ bridging loan, and will almost always be offered at a preferential rate of interest. By contrast, bridging loans with no predefined exit strategy at the time they are issued are referred to as ‘open’ bridging loans, and are charged at a higher rate.
For more information on how to qualify for a competitive bridging loan or to discuss your requirements in more detail, contact a member of the team at UK Property Finance today.
Bridging Finance or bridging loan is a short term loan which bridges the finance gap between selling your existing property and buying a new one.
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