If you are looking for information about the application process for bridging loans, you have come to the right place. Bridging finance has become a mainstream lending source for property investors and developers and provides quick access to funds. You can get it from direct bridging lenders or a p2p lending platform. Many factors can impact the process and outcome when applying for a bridging loan. But before applying for such a loan, we will let you know a few bridging finance criteria that can increase the chance of approval and make the application process easier for both you and your lender.

Here we will explain how a bridging loan application works and the eligibility criteria for bridging finance.

How Does Bridging Finance Application Work?

The application process for a bridging loan is usually divided into four parts-borrowers, loan purpose, property and exit strategy. Let’s have a detailed look at each of its parts:

The Borrower

The leaders will always look at borrowers to assess their credibility and find whether they can afford to repay the loan amount or not. As a borrower, you need to provide proof of identity, address and bank statements. Most lenders look at the bank statements of the last three months, but they may change depending on the lenders.

Loan Purpose

Lenders always want to understand for what purpose they are taking out a loan. You can use bridging finance for a number of purposes, such as purchasing a property before the sale of existing property, buying property at auction, renovating a property or funding a development project. Different situations need different documents. For example, if you are investing in a property for a business purpose, you have to provide the underwriter with evidence of the business purpose.

The Property

The lender always wants to know about the property that you are using as a security against the loan. They also carry out a valuation report on your property to know its market value. Some lenders also require you to show your property portfolio to find out if you have experience in this area. The documents you have to show depend on the type of property, whether it is commercial, new build or rented.

Exit Strategy

The exit strategy is the most crucial thing when you apply for a bridging loan. Almost all lenders want to see your exit strategy and how you plan to repay the loan. The following are the most common exit strategies:

Sale of a property
Remortgaging
Refurbish and sell the property to get profit

Eligibility Criteria That Help To Get Approved

As with all types of loan applications, certain factors help you get quick approval. Here are a few factors that will increase your chances of approval for a bridging loan.

Personal Finances And Situation

Generally speaking, the better your financial situation, the easier it is for you to secure a bridging loan. Bridging lenders carry out a credit check and need you to provide proof of income. However, most lenders are concerned with your security property. If you are purchasing a property for business purposes, the application and approval are quite quick and usually complete between 7 to 14 days.

Available Documentation

Suppose you are able to provide all the necessary information and documents, including your proof of income, photo ID and proof of address. In that case, it will ensure a smooth and quick application process. If your documents are not ready to go, it can delay your approval, and you may not be able to fulfil your financial obligations.

Credit Rating

Although bridging lenders are not focused on short-term bridging loans UK, it still plays an important role in determining whether you are in a stable position to borrow money. Bridging lenders are more concerned about your exit strategy, but credit rating is important in assessing risks and setting interest rates. If you have a good credit rating, you can get a low-interest rate and vice versa.

Some lenders even offer loans to borrowers with below-average credit ratings. The only way to know the specific criteria is to contact the lender directly.

Current Market Situation and Interest Rate

Taking a bridging loan from mainstream lenders or high-street banks is quite challenging. It means the market is highly competitive and specialist bridging loan companies battle it out for the lowest interest rate. Although bridging loans come with a higher interest rate compared to traditional mortgages, you are likely to find an affordable deal in the market due to its oversaturated nature.

Business and Property

Bridging loans can be much easier to secure when you have a large deposit or a large property equity. In addition, lenders are more likely to accept your loan application if you have a well-built and healthy property portfolio.

If you are purchasing a property for commercial purposes, your lender might want to see your business plan to check your plan’s viability. They also want to see your exit strategy. All of this can give lenders confidence that they are lending money to a creditworthy borrower. The fewer risks you have, the more likely you can secure a bridging loan. Providing all the required things on time can make the application process much easier and quicker.

Conclusion

The Bridging loan application process is straightforward. You do not need to go to the lender’s office and make an application online. Always make sure to meet the eligibility criteria so that your chances of approval increase. If your loan application is rejected, don’t worry. You can rectify issues in your application and apply again in future.

Always make sure to choose a well-reputed and experienced bridging loan company because they can provide the best advice and support during the application process. They have experience and have already worked with many borrowers like you, so they can understand your situation and provide you with the right solution. If you meet all the eligibility criteria, you can get approval within hours and transfer money to your bank account quickly.

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