Bridging Loans and Finance Content Hub
Who is Eligible for Bridging Finance?
Considering applying for fast finance and not sure whether your application will be accepted? Then check out our guide to bridging loan eligibility, below, then give our friendly team a call to discuss your funding options in detail.
Bridging Loan Criteria: Who is Eligible for Bridging Finance?
Each lender will have their own specific list of bridging loan criteria which a borrower must hit in order to be accepted for a loan. However, most borrowers fall into the below:
Please note: As collateral is required, credit history is often inconsequential, and proof of income is unimportant.
- A private individual, partnership or limited company.
- Purchasing or refurbishing residential or commercial property.
- Over the age of 18 years old - Some lenders have an upper age limit.
- Live or have a registered address in the United Kingdom.
- Has a form of security – usually one or more properties that the loan can be secured against.
- Has a defined exit route – plans to sell the property, refinance or money due to be received.
- Wants to borrow at least £10,000.
- Employed, self-employed or retired.
What Can a Bridging Loan Be Used for?
Generally, bridging loans are aimed at landlords and amateur property developers. However, it is more the situation than the buyer that a lender will focus on.
Here are a few reasons why a person may require bridging finance:
1. A Fast Property Purchase
Bridging finance is highly popular among those looking to purchase a property quickly. In most cases, bridging funds can be made available within a week, which is much quicker than a mortgage takes to process. A purchase is made using this cash loan, and long term finance is found in due course. With terms from 1 day to 3 years, this loan can be personalised to suit your financial predicament.
2. Property Refurbishment
If a property has no kitchen, bathroom or needs complete refurbishment, it can be hard to get a mortgage. In the past, many have resorted to putting a 100% retention on a mortgage, but it is now possible to apply for bridging finance and then refinance on to a long term option. These loans are very secure and therefore can be extended in order to cover the costs of refurbishment if needed.
3. Breaking the Chain
When you are looking to move house, one of the main things that may hold you back is the inability to sell your property. This can be highly annoying if you have already found somewhere you’d like to purchase. This is where bridging finance comes in – a loan will be granted and secured against the property you wish to sell in order for you to transfer your mortgage to the new property. When the property sells you simply redeem the loan. This is a handy way of breaking those pesky property chains.
4. Auction Purchases
When purchasing at auction it is important to have the appropriate funds secured before raising your number paddle. Most auctions will allow 4 weeks, post bid, to complete, meaning a bridging loan can be used during these 4 weeks while long term finance is secured.
5. Quick Cash
If you are selling or refinancing a property then you may not be able to access these funds. A bridging loan can be used in a commercial sense to pay essential payments such as tax and VAT, support the business in a temporary cash flow shortfall or to help fund business requirements such as replenishing stock or covering marketing costs. This is one of the most detailed and varied uses of bridging finance so it is important you discuss this in depth with your commercial broker.
Finding the Right Finance
Do you fall into one of the above categories? If you do and you think bridging finance might be beneficial for you, contact us today so that we can discuss your options further.