Can I get a regulated bridging loan with bad credit?

Sometimes regulated bridging loans are used to purchase houses quickly in order to complete quickly. The question below from Sam asks if a bad credit history will impact on getting a regulated bridging loan quickly.

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Question

Hi Pete,

I’m buying a residential property, have an agreement in principle in place and need to complete the transaction quickly. A sale has been agreed for the house I’m moving from but it won’t be finalised for another few months.

Meanwhile, there are other interested parties for the house I’m buying, so I’m considering taking out a regulated bridging loan to finalise my purchase quickly. Once my previous house has sold, I could use some of the proceeds to pay off the debt as I’d prefer not to add it to my new mortgage.

The only problem is that I have bad credit. I made a few late payments on my mortgage last year while I was between jobs and I’m concerned that this might stop me from qualifying for a bridging loan. Is this likely to be the case?

Thank you in advance,

Sam, Brighton

Answer

Hi Sam,

Thanks for your enquiry. I’ll try to be quick here as I know that timing is of the essence for you. The good news is that it’s absolutely possible to get a bridging loan if you have credit. In fact, the criteria for this is actually more flexible that it is for mortgages.

Bad credit is only really an issue for bridging finance lenders if it puts the exit strategy at risk, and a few late payments on your last mortgage shouldn’t impact that since your plan is to sell your current home and use some of the proceeds to settle the bridging loan.

In any case, late payments are generally considered one of the less severe forms of bad credit, so you shouldn’t be concerned about them scuppering your new mortgage application either.

Most bridging lenders would likely be comfortable with the amount of risk this deal carries since you have an offer on the table for your current home and a fall-back exit strategy, assuming that adding the funds to your mortgage is a potential plan B.

In the event that a lender turns you down, there are certain to be alternative options in the shape of specialist regulated bridging finance providers.

I hope it all goes well,

Pete

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You can read more questions and answers about regulated bridging loans here:

• Can you get a Regulated Bridging Loan without any property experience?
• Are Unregulated Bridging loans safe?
• How much deposit do you need for a Regulated Bridging Loan?