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Bridging loan application process

Unsure what the bridging loan application process entails? The experts we work with can guide you through it.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 20, 2022

We are asked about the application process for bridging finance all the time, so we’ve collated everything you need to know here, including how long it typically takes and whether you’re likely to be eligible for it.

Read on to find out more or make an enquiry to speak with a bridging loans expert over the phone.

What does the bridge loan application process entail?

Before you set out to apply for a bridging loan, bear in mind that you will need to be able to evidence a strong exit strategy to convince a lender to offer you capital.

All bridge loans are offered on a short term, interest only basis and the borrower doesn’t usually make monthly repayments. The full amount is due at the end, and the exit strategy is how you plan to settle the loan. This will usually be either a remortgage or the sale of a property, although some lenders will be happy with ‘non-standard’ exit strategies.

The bridging loan process involves the following steps…

  1. The broker will conduct a fact find on the borrower to establish their personal and employment circumstances once an initial enquiry has been made.
  2. The broker will request details of your exit strategy, assess its viability and want to see evidence supporting it (for example, a deal in principle if it’s a remortgage).
  3. They will source a lender and may approach them for an agreement in principle (AIP) – some, however, skip the AIP and go straight to full application.
  4.  After the underwriting process has been completed, you will be presented with a conditional offer. Unlike with a mortgage, this is not binding and is dependent on the valuation and certain conditions from the solicitors.
  5. The application is then passed over to the solicitors for completion.
  6. Completion and the release of funds can happen shortly after this, as long as the solicitor is a good one. It can help if you have one with specialist bridging knowledge.
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What are the requirements for a bridging loan application?

A lender may ask you to provide the following when you apply for a bridge loan…

  • A valuation report:
    This doesn’t usually need to be conducted ahead of time as most lenders will have it carried out via their own panel of surveyors. A minority, however, might request that you foot the valuation bill yourself.
  • Proof of ID:
    Proof of address (and residency, if applicable) will also be requested.
  • Proof of exit strategy:
    This is standard for a bridging finance application. If your plan is to remortgage to settle the debt, then a deal in principle will suffice. Those using non-standard exit strategies such as investments or inheritance may be asked to provide proof that the funds are entering their bank account within a set timeframe.
  • A business plan:
    If there is a commercial element to the property you’re investing in, the underwriters may request a business plan to assess its viability.
  • Evidence of your experience in property:
    This will only be requested by some lenders if the applicant’s plan is to develop a property. They may ask to see evidence of previous projects to examine your track record in the industry.
  • Proof of income:
    Some lenders will request a diminutive type of income proof (bank statements etc), although this isn’t always necessary as the exit strategy is of greater importance.

How to get a bridging loan quote

The way to get find a favourable bridging loan quote is by seeking whole-of-market advice. That way, you can rest assured that you will have access to the best deals available for somebody with your circumstances, needs and goals.

The expert bridging finance brokers we work with have access to the entire market and can connect you with the right lender if you make an enquiry.

Can I apply for a bridging loan online?

Yes, you can get the ball rolling on your application by clicking here to make an initial enquiry with us. Many lenders allow online applications for bridge loans and would be happy to carry out the bulk of the correspondence through this channel, but it’s always a good idea to seek whole-of-market advice before sourcing a bridge loan quote online.

How long does it take to get a bridging loan?

Customers often ask us how long does a bridging loan take to arrange? And the answer might surprise you.

The application process for a bridging loan can usually be completed relatively quickly, especially if the exit strategy is the sale of a property. Most lenders will be in position to make you a conditional within a matter of days, usually subject to a valuation. Where time is of the essence bridging loan applications have sometimes been accepted as quickly as the next day.

Can I apply for a bridging loan anywhere in the UK?

Yes, but your choice of lender may be restricted if you’re seeking a bridging loan in Scotland or Northern Ireland as not all providers cater for borrowers in these countries.

The lenders who do cover Scotland will only cover certain postcodes (largely limited to the mainland) and you’re likely to find similar restrictions in Northern Ireland, although lenders in the latter tend to be more flexible if you’re seeking non-regulated bridging finance.

In England, certain lenders impose minimum loan and property values, and in some cases the only properties that will meet their criteria are situated in London.

Bridging loan eligibility criteria

Bridging loans can provide a lifeline when a borrower has been turned down for more traditional forms of finance, such as a mortgage, for whatever reason.

When you apply for bridging finance, the lender will assess your eligibility based on the following factors…

  • Your exit strategy
  • What you’re planning to use the funds for
  • Your deposit size
  • Your location
  • Credit rating
  • Your experience in property

How exit strategy impacts on a bridging loan application

Having a viable exit strategy ranks at the top of any providers’ bridge loan requirements checklist.

Bridging finance is all about the client’s exit strategy as these loans are offered on an interest only basis, meaning the borrower only pays off the interest initially, with the full loan amount due at the end of term or when the customer chooses to settle.

When a bridging loan is handed out for property purposes, the vast majority of the time the exit strategy is either a remortgage or the sale of the property.

Most bridging finance providers will base their lending decision on how strong your exit strategy is, and you should expect them to request evidence of its viability.

If you’re planning to remortgage, they may ask to see a decision in principle in advance, and if your exit strategy involves selling the property, you’ll need to have a formal valuation carried out.

Non-standard exit strategies

Some lenders will accept non-standard exit plans, such as using investments, endowments, inheritance and other forms of income to pay off what you owe, but only if the funds in question are due to enter your account within a certain time-frame, usually 4-6 months.

With non-standard exit strategies, some providers will charge interest at a daily rate, rather than monthly, to safeguard themselves against the higher risk involved.

What you’re planning to use the bridging loan for

This is connected to exit strategy, as bridging providers will want to ensure the investment you’re making is viable and therefore likely to yield enough capital to settle the final amount at the end of term.

They’ll want to know exactly what you plan on using the capital for, though technically you can get a bridging loan for any legal purpose whatsoever.

Property type can be a factor here

Some lenders will add caveats depending on the type of investment you’re making. For instance, if there is a commercial element to a property you’re purchasing (such as a hotel or shop) the underwriters may want to see a business plan before rubber-stamping the loan.

Each applicant is assessed on a case-by-case basis, and there are providers who are reluctant to offer loans for certain commercial property types, such as petrol stations and restaurants, due to the increased risk.

Others, however, might be willing to take a punt on investments of this nature, providing an acceptable exit strategy is evidenced.

If you’re planning to offload or rent out a property you have invested in, most lenders will be happy with this, as long as the property is likely to sell or generate rental income.

There are some restrictions on bridging usage

Although bridging loans are available for many purposes, there are scenarios the majority lenders will impose restrictions on.

For example, most will be unwilling to offer you credit to pay a tax bill, and taking out bridging to repair credit is prohibited at regulator level.

Uninhabitable properties can impact a bridge loan application

We’ve already discussed how most lenders will be happy to grant you bridging finance for a standard residential property or a buy to let (providing you have an exit strategy) and that some are happy to grant capital for commercial investment.

You might, however, encounter restrictions if you’re investing in an uninhabited property as the loan provider may base their lending decision on the condition of said property.

If it’s a shell of a building that is not connected to gas or electric, your choice of lenders will likely be slimmer. Investments are judged on a case-by-case basis and you can expect the finance provider to request a valuation of the property to establish whether it’s a viable purchase.

If you’re unsure whether you’d qualify for a bridging loan to fix up an uninhabited property, get in touch and the whole-of-market advisors we work with will help you find the lender most likely to offer you a favourable deal.

Should I apply for a bridging loan if I have bad credit?

A clean credit rating is always desirable to bridging lenders and it will help you get the best rates.

That said, it isn’t impossible to secure bridging finance with bad credit, as there are specialist lenders who will deal with borrowers with the following against their name, as long as their adverse does not put the exit strategy in jeopardy.

  • No credit history
  • Low credit score
  • Late payments
  • Missed mortgage payments
  • Defaults
  • CCJ’s
  • IVA’s
  • Debt management Schemes
  • Repossessions
  • Bankruptcy
  • Payday Loans

The severity of the bad credit – a recent bankruptcy is a bigger deal than a missed phone bill payment, for instance – and how long it has been on your file (the older, the better) could impact on the lending decision, but be aware that any adverse credit whatsoever is enough to put off a number of lenders if your exit strategy involves a remortgage.

Thankfully there are several lenders happy to consider bridging finance for people with credit issues, and while some will consider you too high risk, the whole-of-market advisors we work with may be able to connect you with a provider who is happy to offer a bridging loan to borrowers with bad credit, so make an enquiry to talk with them right now.

Will experience in property help my bridging loan application?

It certainly won’t hurt it, as a strong track record in the industry will help you convince the lender that you’re low risk and are capable of achieving your plans.

Some lenders will insist on property experience if it’s a complex development project, but there are also bridging providers who are happy to deal with inexperienced borrowers, as long as they have a viable exit strategy in place.

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How much deposit do I need for a bridging loan application?

Most bridge loans are offered with a loan to value ratio of 70-75%, but since the interest repayments are factored in, you will usually need a deposit of at least 30-35% of the property or asset’s value, and that’s when it’s a straightforward deal.

For higher-risk deals, the LTV can drop to anywhere between 50% and 60% and what is classed as high risk will vary from lender-to-lender. Some consider land and commercial property deals risky, while others are cautious of non-standard exit strategies.

What is classed as a non-standard exit strategy?

This is when a borrower uses investments, inheritance endowments and other methods to pay off the loan at the end of the term.

Some lenders are okay with this, but they may want to see evidence that the funds are due to enter your account within a certain time-frame, and might charge interest daily, rather than monthly under these circumstances.

Can I use a bridging loan purchase a buy to let property?

Yes! This is often referred to as a bridge to let application and there are lenders who can process your bridging finance and BTL mortgage simultaneously.

They will aim to offer you an agreement in principle on the mortgage when the funds are due to be released, but you will need to meet their eligibility and affordability criteria for BTL mortgages.

Can I apply for a bridge loan if I trade as a Limited Company?

There’s no reason why you shouldn’t. There are bridge loans for Limited Company borrowers and the rates they come with are usually no different.

Bridging loans for Ltd Companies are usually treated similarly to Ltd Company buy to let mortgage deals, with the lender requesting a personal guarantee from the directors.

It may help your cause if the Ltd Company is a special purpose vehicle (SPV) by increasing the number of approachable lenders, but this is by no means essential.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

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How to get a bridging loan

Customers often ask us “How do I get a bridging loan?” and the answer is simple: they’re available through mortgage brokers and advisors, and the best way to find one with favourable rates is by searching the entire market for deals tailored to your circumstances.

The advisors we work with have access to the whole of the market and can connect you with the lender most likely to offer you a favourable deal if you make an enquiry.

Speak to a bridging loans expert

If you like anything in this article or you’d like to know more, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the bridging finance lender with the right expertise for your personal circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

We can help!

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in Bridging finance.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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