The bridging loan process isn’t as daunting as it may seem. Bridging loans are a quick and easy option to get short-term financing. This type of financing can be utilized for a variety of tasks, such as ending a chain of house purchases, property auctions, remodelling and more.
This specific type of loan is intended to be set up fast, in most cases to meet an urgent need. They are therefore a desirable substitute for conventional mortgages, because of this, one of the most frequent queries from new customers is how long a broker will take to finish their bridging loan application.
Below we will break down the timescales for applications, as well as the components that can slow down applications and how the applicant can assist us in completing their application quicker.
The bridging loans process can be completed fast and with ease, making it a great solution for circumstances that require funds quickly but can be repaid in a short amount of time.
What is a Bridge Loan?
A Bridge Loan is identified as a short-term loan that is utilized until an individual or business pays off an existing debt or obtains long-term funding. This type of loan is usually taken out for a duration of two weeks to three years while larger or longer-term funding is arranged. To repay the bridge loan and cover other capitalization requirements, funds from the new financing are typically utilized.
Something important to note: Because they carry more risk than regular borrowing, bridge loans are usually more expensive, and Property is always used as security for bridging loans. To read more about Bridging Finance Rates and costs take a look at this article: Bridging Finance Rates Explained
A bridging loan, in contrast to a regular mortgage, is intended to be paid back in full after the term, often in 12 months.
As a result, you will need to “exit” your bridging loan, which is usually accomplished by selling another property (like your previous house), but it can also be accomplished by flipping the property you purchased with a bridging loan or by refinancing with a conventional mortgage.
How quickly can I get a Bridging Loan?
A bridging loan should be disbursed within 5–10 days, however, 7–14 days is significantly more typical. At Bridging Finance the average completion of a bridging loan is between 2-4 weeks depending on the solicitor’s work being carried out.
What Factors could slow the process down?
-The rate at which a client is content to repay:
Bridging loans are priced based on the lender’s level of risk, just like conventional loans. A business that promises speedy processing and little verifications runs a higher chance of the borrower defaulting on the loan. Therefore, increased interest rates and payback terms are probably in store. You might have to wait longer for the money to transfer if they are determined to get the greatest offer.
-The lender you choose:
Each lender will have an application that a customer needs to fill out. Some need more thorough inspections than others. The Financial Conduct Authority, or FCA, has no jurisdiction over companies that offer unregulated bridging loans. Since these providers have less red tape to deal with, applications are usually processed more quickly.
-A client acting without expert advice:
Years are spent by brokers and master brokers establishing productive working connections with finance companies. They are aware of the items that will most benefit their clients and how the system functions. A client acting without a broker will likely take longer to choose a supplier, get the best deal, and finish the application procedure.
-Should a survey be required:
The majority of lenders can make a loan decision in a matter of hours, but only when the property in question has been examined can they make a solid offer. Some lenders will speed up the process by omitting the requirement for a survey. A survey is the greatest method to guarantee that the property is purchased at a reasonable price and that the lender is accountable, even though it can slow down the process.
Some of these hold-ups are preventable However, expediting the procedure puts the lender at higher risk, and this will probably be passed on to the client.
How to get a Bridging Loan?
Usually, to obtain a bridging loan, you must consult with a bridging loan broker. Although some lenders may not accept direct applications, you can approach them directly. To navigate the process, evaluate rates, and obtain the best offer, the majority of customers also employ bridging loan brokers. In general, we advise against attempting to go direct unless you have already utilized them.
Bridging Loan Process:
STEP 1: Indicative quotation (Initial Enquiry)
We discuss your needs and unique situation over the phone during your initial consultation, and we come up with a solution just for you. After that, you will receive a quote; if the numbers meet your needs, we will move on to the next phase. This is the moment to ask questions if bridging finance is new to you. You might be curious about the distinction between open and closed bridging finance, or what happens if the payback deadline is missed.
STEP 2: DIP Approval (Loan Offer)
The broker will get in touch with one or more lenders once they have determined why you require a loan and are confident in your understanding of bridging finance. Thanks to our extensive network of lenders we get our clients the best rates and find them the most suitable lender.
It takes an hour or two to get a decision in principle, and if accepted, we send you a comprehensive quote along with a copy of the terms.
STEP 3: Property valuation and application process (Valuation and Legal work)
The following step is legal and valuation work after you accept the loan offer. Typically, real estate is given out as loan collateral. To ensure that the property’s worth matches the loan amount, a valuer inspects the property and documents the findings in a report. There are situations when a valuation is not necessary; for instance, if the property has just undergone a survey and appraisal, a new one might not be required right away.
All the information required to submit an application for evaluation to the lender will be obtained by your assigned processor. A complete offer will be sent to you after approval.
STEP 4: Completion (Drawdown)
The drawdown is the procedure for releasing the funds following the valuation and legal procedures. This can be sent to your bank or, if the loan is utilized to buy real estate, it can be sent to the real estate vendor.
Contact us
We at Bridging Finance can assist with meeting tight deadlines and provide fast and professional bridging loan service. We are bridging finance experts, providing our clients with the best rates and fast completions. We understand that time is precious and ensure fast and highly flexible bridging loans with minimum fuss.
Start the process by submitting a free initial inquiry to us or call us on +44 011 63666339 to speak to one of our experts.
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