The main benefits of bridging loans are their flexibility and how quick they are to arrange, but just how fast is the bridging finance process and how do you go about kick-starting it in an emergency? These are questions customers ask us all the time, and you’ll find the answers below.
The following topics are included in this article…
We often hear from customers urgently needing finance for an opportunity ASAP asking us “how long does a bridging loan take?” and the answer in most cases is ‘not very’ – at least compared to more traditional forms of borrowing such as mortgages and secured loans. In fact, one of the main benefits of using bridging finance for property purposes is how speedy it can be to arrange.
With the most straightforward bridge loan applications, it is possible to have a conditional offer on the table within a few days of the initial enquiry. More complex cases can take weeks, rather than days, but this will still likely be swifter than the alternatives.
How to get a bridging loan as quickly as possible
The best bridging finance lenders pride themselves on being able to provide finance quickly, but you might find that some are speedier than others, and that certain bridge loan providers may even turn you away on eligibility grounds.
If timing is of the essence, being told ‘no’ can delay your efforts to secure funding even further, and this is just one of the reasons why approaching multiple lenders is never a good idea (plus it could also negatively impact your credit file).
So, what is the best way to land a bridging loan quickly? Well, you should start by making an enquiry here. We work with expert brokers who will search the market on your behalf for the bridging lender in the best position to offer a great deal and fast bridging finance to a borrower with your needs and circumstances.
Not only will using a specialist bridging broker save you legwork and potential black marks on your credit report, it could also save you precious time.
How long does it take to get a bridging loan approved?
For those needing the red carpet treatment and a bridging loan sorted ASAP, the experts we work with have sorted funding within 24 hours of the application.
On other occasions it may take 2 days (48 hours).
It can take longer, however, as the speed at which it takes can vary from application to application. Different factors impact the speed at which a lender can process the application and it is down to your individual circumstances and the details surrounding your loan.
Get in touch with us to be passed to an expert who can give you an idea of the fastest possible timescales.
What does the bridging loan application process involve?
Bridging loans are normally rapid to arrange compared to mortgages because the lending decision largely depends on the exit strategy. If your plan for settling the loan at the end of the term is strong and clearly evidenced, the majority of the underwriting is taken care of.
The bridging loan process involves the following steps…
The borrower makes an enquiry and the broker carries out a ‘fact find’ to establish their personal circumstances, goals and financial situation.
The lender requests evidence of the exit strategy and assesses how realistic it is. This is usually either a remortgage (lender may want to see an agreement in principle) or the sale of a property (a valuation will need to be carried out).
The broker will source bridging lenders to receive an agreement in principle (AIP) for the bridging loan - however, some lenders do not offer AIPs for bridging and go straight to full application.
After the underwriting the lender will issue a conditional offer, and this is different to a standard mortgage offer in the sense that it is not binding. The offer is conditional based on a valuation taking place and solicitors’ requirements being met.
From this point on the process is much the same as a standard mortgage application - it’s over to the solicitors to handle the legal aspects, and the funds are released once they’re completed their legal due diligence.
What determines how fast bridging loans are to arrange?
There are a number of factors which determine how straightforward your bridging loan application is to process, and most of them related to eligibility, such as…
The strength of the exit strategy
Whether it’s a regulated or unregulated bridging loan
Your credit rating
The property type
Whether you have experience in property
If a valuation has been completed already
How exit strategy affects the bridge loan application process
Bridging loan lending decisions can rest on the strength of the exit strategy almost entirely, and the stronger yours is, the better chance you stand of securing a deal quickly and with the most favourable interest rates.
If your exit strategy is the sale of the property in question, the lender will want to see that the property is sellable and capable of raising the required amount. If it’s a complex development project that needs additional scrutiny to determine this, there’s a possibility of the loan taking longer to process.
The same applies if the exit strategy is a remortgage. Some lenders will request to see an agreement in principle in advance, and the more straightforward and achievable your plans are, the easier if will be to obtain one.
Regulated vs unregulated bridging loans
The length of time your bridge loan takes to process will also depend on whether it’s regulated or unregulated.
Regulated bridging finance is aimed at anyone who needs a loan for a residential property they either live in or are planning to live in. They’re regulated by the Financial Conduct Authority (FCA), giving the borrower extra protection against mis-selling and bad advice.
These loans usually take longer to arrange than unregulated, especially if the solicitors are inexperienced in bridging finance - a matter of weeks rather than days, in some cases.
Unregulated bridging loans are nowhere near as dubious as they might sound. This is simply the term used for commercial bridging finance, which needs to be more flexible and tailored to the needs of the individual borrower.
Having bad credit is not a deal-breaker to some bridging lenders, as long as the exit strategy is strong and will be unaffected by the adverse, but if you have any of the below against your name, things may be less straightforward.
Some bridging lenders might be mindful of bad credit borrowers if the exit strategy is a remortgage and underwriters may be concerned about the possibility of further adverse building up during the loan term, but that doesn’t mean finding a quick bridging loan deal is impossible under these circumstances, especially if the exit is unlikely to be jeopardised.
Make an enquiry and the and the advisors we work with will help you find the lender most likely to offer fast bridging finance to borrowers in your situation.
The property type
In theory, it is possible to get a bridging loan for virtually any property type - even ones which most mortgage lenders might consider ‘unmortgageable’.
This is all assessed on a case-by-case basis, but generally speaking, the deal will be less complicated if you have a good security property that’s ready to sell and is likely to be offloaded for the required amount. Obviously, having a deal on the table can be a big help here. Variables such as non-standard construction, leaseholds and undesirable locations may put off buyers and jeopardise the exit.
Loans for commercial properties can also take longer to process, and in some cases, the lender may ask to see a business plan, adding an additional step to the deal. You should also keep in mind that specialist providers might be required for properties such as a hotel or a flat with a ground-floor shop, as some lenders consider these too high risk.
Experience in property
It’s entirely possible to get a bridging loan with no property experience whatsoever, but having some to your name is usually beneficial. If you can prove you have a strong track record in the industry and can show evidence of past projects, some lenders are more likely to be convinced that you’re a low-risk borrower, and therefore things may go smoothly from the off.
For complex development projects, some lenders may insist in property experience.
What is the maximum LTV on a fast bridging loan?
The maximum LTV on most bridging loans is between 70% and 75%, meaning you will need a deposit of at least 30-35% to secure a property with one, as the interest payments are factored in. For higher risk commercial properties, such as petrol stations or restaurants, the LTV can fall to between 50% and 60%.
It is possible to get higher LTV bridging loans, up to 100% even, but this usually means putting up additional properties/assets as security. Most lenders are okay with multiple securities, but each may require a separate valuation at your time and expense.
Can I get a quick bridging loan for a buy to let property?
It is possible to get a bridge loan for an investment property and a BTL mortgage for said property from the same lender. This is sometimes referred to as a bridge to let application, and lenders who offer these may give you an agreement in principle for the mortgage when the loan funds are due to be released.
The BTL mortgage aspect of the arrangement, including the valuation, will be subject to the same criteria as one of the lender’s buy to let mortgage products.
Can I get a quick bridge loan if I trade as a Limited company?
Yes, quick and easy bridging loans may be available you if you’re set up as a Limited Company, as long as you have a strong exit strategy.
The rates are usually the same for Limited Company borrowers and some lenders will treat their applications similarly to buy to let mortgage deals, and may request a personal guarantee from the company directors.
Your choice of lenders will be wider if your Ltd Company is a special purpose vehicle (SPV) but it may still be possible to secure a favourable bridging finance deal if this isn’t the case.
Speak to an expert bridging finance broker
For further information about getting a bridging loan quickly and get the ball rolling on your application for one, call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry here.
Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. – We don’t change a fee and there’s no obligation or marks on your credit rating.
*Based on our research, the content contained in this article is accurate as of 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 info 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.
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 here...
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