If you’re thinking of getting a bridging loan but not sure how easy it is to secure one, then you’ve come to the right place. We’re going to be discussing the bridging loan process, what you will need to get one, who they are available to, and answer the question, are they challenging to obtain?
Bridging loans are straightforward to obtain; the whole process is swift once the lender has all the relevant details. The main factor the lender takes into consideration is the “security” asset offered against the loan, and this determines the amount you will get.
How To Get A Bridging Loan
Bridging loans are available through lenders and brokers, who will evaluate individuals and companies to determine if they can get a bridging loan. We’re going to discuss the simple process of how to get a bridging loan:
Find A Lender and Enquire-The first step of the process for a bridging loan is to find a lender and enquire with them about their services and what they can offer.
Finding the right lender is essential; each one will provide different rates, and some may charge extra fees that others don’t. Always look at the various lenders on the market and compare them, keeping in mind that they should all have similar, competitive rates.
Once you’ve found the right lender and you’re happy to use them, you then need to enquire with them. This is like a consultation that a lot will offer for free; talk about why you want the bridging loan, how you plan to repay it, how much is needed, and how long it will take to repay.
They will probably also discuss your equity in assets to be used as security and the exit strategy. This is also the perfect opportunity to ask any questions you have about the bridging loan.
- The Bridging Loan Offer-
During the consultation, the lender may take notes relating to the bridging loan you’re needing. From this, they can put together a quote that includes the value of the bridging loan, additional fees, interest rates, and terms and conditions of the loan. This will then be sent to you to look through and request any changes if needed.
A valuation is carried out, generally on the assets you’re using as security, ensuring they could cover the loan’s value if needed. They will also look at your exit strategy and ensure that this will make enough money to pay the loan back on time.
These are just like some final checks before committing to the loan so the lender can make sure they’re safe and covered and ensure that you are getting what you need and can pay it back.
A solicitor may also be present to start any legal work, give advice, and check the loan agreement. This is usually something that a lender will have, but the applicant will need to pay for it.
- Receiving The Funds-
Once you’ve gone through this process, happy to go ahead and sign for the loan, the money is then yours. The funds should be available within about seven days, and this can then be used for what was agreed upon. It’s as simple as that!
Find out more about bridging loans for property development here.
What You Need To Get A Bridging Loan
When it comes to a bridging loan, there are certain things that you need to pass the application for one. However, each lender will be different. Below is a look at the key things you will need to get a bridging loan and some information about them.
One thing you will need to get a bridging loan is enough equity in assets that can be used as security. This is then ‘kept’ by the lender, and if for any reason, you are unable to pay the loan back, the equity in the security is then theirs. This is to cover the lender from losing out on any money. Assets that can be used for security include properties, land, cars, etc.
- Exit Strategy-
Along with the security needed, you also need to provide an exit strategy discussed during the application. This is how you plan to pay the money back for the loan. An example could be that you’re using the loan money to renovate a property that you then plan to sell. The sale of the house can then be used to pay the loan back.
- You may also need to provide evidence and paperwork of certain things, depending on what the loan is used for. If it is used for property purposes, you might need to provide proof of the house’s sale and the plans for it.
Who Can Get A Bridging Loan?
Bridging loans are easy to get and available to a broad audience of people. They are available to both individuals and companies and can be used for a variety of reasons.
When applying for a bridging loan, the lender will look at your current situation, the plans for the money, security, and the exit strategy used to determine if they will give money out.
So, anyone can get a bridging loan; however, it depends if they are approved and pass the application from a lender.
Are Bridging Loans Difficult To Obtain?
We’ve looked at the simple process of getting a bridging loan and some of the critical things you will need when it comes to getting one.
In answer to the question, no, it’s not difficult to obtain a bridging loan, as long as you have your plan in place. Security is needed, so you will need to make sure you have something you can use for that, and all lenders will want an exit strategy to know how you will pay the loan off.
Apart from these, it is relatively easy to have a consultation and apply for a loan and then receive it within a few days.
They’re also available to anyone, making it a lot easier for people to get them, as they’re not targeted towards a specific audience.
Here at Property Finance Partners we are specialist brokers in getting bridging loans fast and the best possible terms. We compare the whole market to get the best deals. Contact us on 020 3393 9277 or Email: [email protected].