There are many different bridging loan providers and each lender will have its own set of specific criteria. This blog post highlights typical lending criteria that a borrower must hit to be accepted for a bridging loan.
Loan Sizes
Most bridging loan providers will lend loans from a minimum of £10,000, with no maximum on the amount you can borrow.
Term
This is how long you will be borrowing the money for. A bridging loan is a short-term loan, so most lenders will typically let you borrow the loan for between 1 day and 18 months, although some lenders can extend this term to 36 months or more. FCA regulations limit regulated loans to a maximum of 12 months.
Types of Borrowers
Types of acceptable borrowers and bridging loan applicants are private individuals, pension funds, partnerships, limited companies, and offshore companies.
Age
For the majority of lenders, applicants must be a minimum age of 18 to qualify for a bridging loan. Some bridging lenders also have an upper age limit, and the applicant must be comprehensively aware of what they are applying for.
Location
Applicants must live in the UK with an address in either England, Wales, Scotland, or Northern Ireland.
Purpose
A bridging loan can be used for any legal purpose including maintaining a place in chain, buying auction property, buying property in poor condition, funding a renovation project, raising working capital for your business, purchasing land, funding a property acquisition, a fast property purchase, property refurbishments, buying property before selling your current property, clearing debts, and covering the costs of a development project.
Security
What you will secure your loan against is one of the most important criteria for taking out a bridging loan. Most lenders require property as security, and the lender will secure the loan by taking first, second, or third charge over the property.
This may be residential or commercial property and includes houses, flats, mixed use, offices, retail premises, industrial units, hotels, care homes, restaurants, pubs, bars, garages, farmland, and land with or without planning permission.
Property can be in any condition, including poor condition, in a bad state of repair, or in need of restoration and refurbishment.
Bridging loans may also be secured against other assets including jewellery, watches, cars, vehicles, precious gems, artwork, and antiques.
Credit History
Credit history is less important to bridging lenders than it is to traditional lenders. Bridging lenders are primarily concerned with security and so will lend to those with a poor credit score. Most lenders will fund regardless, even if you have CCJs, defaults, arrears, IVAs, bankruptcy, and repossessions.
Proof of Income
Most bridging lenders don't require income evidence as lending criteria. As long as you have sufficient security, proof of income is not important.
Interest Payments
As part of the application process, you must decide how you will pay back interest. You can choose to either pay interest monthly and not be added to the finance balance, rolled up interest that is paid in full at the end of the loan, or retained interest that is borrowed for an agreed period and paid back at the end of the loan.
Exit Route
You must decide how you will pay off the loan with a defined exit route. You can do this in any number of ways, including selling the property, refinancing, paying it off using inheritance, selling a business or shares, or with money due to be received such as from investments.
These are the typical lending criteria for a bridging loan. Hit each of these criteria and you should be accepted for a loan. For more information and advice about bridging loans and whether you would be eligible for one, get in touch with the finance experts at Crystal Bridging Loans today.
Crystal Bridging Loans is an award-winning finance distributor specialising in bridging loans. Based in Tamworth, Staffordshire, we provide a fast, reliable, and transparent service dedicated to providing simple solutions to even the most complex financial problems.
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