What is the Bridging Loan Application Process?

Considering securing bridging loans? Securing loans from bridging finance is not complex. There is a specific lending criterion and application process that a borrower is supposed to follow. This article will explore step-by-step bridging finance application processes, but first, we need to understand what bridging finance is.

Bridging Finance is a mainstream funding solution to bridge a gap between finances. The finances are offered for short-term that range from 3 to 12 months and can be extended to a maximum of up to 36 months. These short-term loans are secured against collateral such as real estate.

Application Process

The complete application process from initial inquiry to drawdown may take a few weeks, but this process can be quicker if funds are required instantly. The application process for taking out bridging loans includes the following stages:

Seeking Help from a Bridging Broker

First, you must consult a reputed bridging lender if you are interested in securing bridging loans. An expert bridging broker can help you in many ways, such as:

Choosing a specialist bridging lender.

Finding a favorable deal

Following is a process of finding a favorable deal:

Negotiating with the bridging lender on the client’s behalf.

Presenting the client’s case in the best possible way.

Rectifying mistakes in the application.

Bridging lenders prefer to communicate the deal through a lender. Therefore, seeking an expert bridging broker’s help is recommended before applying for bridging loans to strengthen the chances of application approval.

Initial Enquiry

The borrower is supposed to provide what is enquired by the lender/broker. Through this initial inquiry, the lender gauges the credibility of the borrower and whether he can fulfill the loan requirements or not. This initial inquiry involves the borrower’s age, identity, residence, and sometimes bank statements.

The more proof of your stable financial condition, the easier it is to secure funding.

Purpose of Loan

The lender is keenly interested in why you want to take out bridging loans. The borrower is supposed to provide complete info regarding the rationale and purpose for taking out the loan, how much loan is needed, and whether it will be used for commercial purposes or for residential.

Exit Route

The lenders are most curious about knowing the borrower’s exit plan, meaning how the borrower will repay the loan. Most commonly, the exit plans include selling property and re-mortgaging, etc.

Application Assessment

After an initial inquiry, all bridging loan UK applications are assessed case-by-case. Therefore, the borrower should be transparent while providing details, and he is supposed to provide correct and complete information; legal action can be taken against the borrower if he is found providing incorrect information, or his application can be rejected.

Application Approval

Once the assessment is done, and the bridging lender is satisfied with the proposal, the loan application gets approved and forwarded for survey and valuation.

Survey and Valuation of Property

Bridging loans are secured against the property; a valuation surveyor is instructed to do property valuation and confirm the equity value. Based on the valuation report, it is decided whether funds should be released or not.

The Loan Quote

Based on your financial circumstances, provided info, valuation report, and market trends, the loan offer is emailed to the borrower. This loan offer includes the value (amount) of the loan, interest rates, fees, and terms and conditions.

Solicitor’s Help

A solicitor explains all the agreed terms and conditions of the bridging loans agreement to the borrower. This legal advice can help the applicant understand the agreement between him(borrower) and the lender.

Documentation

All the forms are gathered, e.g., the Decision in Principle form and other necessary documents such as photo ID, proof of residence, evidence of monthly income, etc.

Signing Bridging Loan Agreement

By signing a bridging loan agreement, you enter into a legal contract between a borrower and the bridging lender.

Drawdown

Once the application process is done, and the deal is signed, the bridging lender releases the funds. The borrower is then bound to repay the loan within an agreed time frame, either in installments or as a lump sum at the end of the loan term.

How bridging can be a good option

Bridging loans are used by investors, private borrowers, offshore companies, partnerships, and property developers for fast property purchases. It is also used for residential and commercial properties because of the following reasons:

Unlike a traditional mortgage, bridging loans can be arranged quickly. For instance, if you need instant funding, it can be arranged in a day or two.

It has a quick application process.

Bridging finance/p2p lending offers flexible lending criteria.

Without planning permission, they can be secured against all property types, such as unmortgageable, commercial, residential, and land.

Applicants with bad credit scores may also secure bridging loans if they can deposit additional security or assets.

Unlike mortgage loans, which are long-term funding solutions, bridging loans offer finance for a short-term duration.

No exit fees or early repayment fees are involved.

Final Word

Bridging finance/ peer to peer lending is a good option as it is a quick and flexible financing solution. So are you planning to secure bridging loans? Getting loans from bridging finance is not difficult. A borrower must follow a particular lending condition and application procedure. This article showed you how to complete the bridging finance application processes and provided insights into what bridging finance is.

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