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Can I Qualify For A Bridging Loan? Who are Bridging Loans For?

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Can I Qualify for a Bridging loan, bridging loans are a highly popular financial solution among borrowers that need quick access to funds to purchase a property? Although the qualifying criteria are more relaxed than standard bank loans, there are specific conditions borrowers have to meet. All bridging loans are non-status so you will not have to prove income.


Essentially, bridging finance is only granted to borrowers that have assets that can be secured against the loan. Assets are generally property, but anything of value can be put up as collateral.


As a general rule, bridging finance is aimed at house purchasers, landlords and property developers that do not have sufficient capital to purchase land or property outright.


However, bridging finance can be used for a number of other situations where borrowers need to bridge a gap between acquiring capital to buy and securing capital from a purchase.


Furthermore, lenders have relaxed the qualifying criteria to help people secure the property they would otherwise have been refused by a bank. But that doesn’t mean that bridging finance is easy to get.


Who is eligible for a bridging loan?


Before you can be considered for a bridging loan, borrowers must have an asset that is equivalent to, or more than, the sum of the loan.


The amount you can borrow depends on the facility you are lending from, but as a general rule, borrowers can secure loans from £30,000 to £100m.


To qualify for the best bridging finance, borrowers must be 18 years or above. Some facilities have an upper limit whereas others do not. However, older applicants must prove they are compos mentis, and if not, a representative must apply for a Power of Attorney.


Oftentimes, an applicant’s credit history will be waived as well. Default payments and past arrears are not put under scrutiny. County Court Judgements, Statutory Demands, Winding Up Orders, Bankruptcies and Individual Voluntary Arrangements are also ignored.


Because bridging finance is secured against assets, borrowers do not have to provide any proof of income like you do with standard loans. The main criteria are that the collateral you secure against the loan has sufficient value to cover the amount the contract is worth.


Furthermore, there are no monthly payments. Interest on the loan is paid once the contract expires. In a closed bridging loan, the date will be written into the contract. In an open bridging loan, no date is agreed.


Bridging loans can be settled earlier than the term of the contract if you are able to  - and you will not be penalised for settling the contract ahead of the term. Early settlement is quite common and happens when the funds become available to the borrowers, usually when money from a house sale clears.


What assets can be secured against a bridging loan?


Most bridging loan facilities require property as security. This may be one property or several properties depending on the size of the loan.


The type of properties bridging loans are typically secured against are residential homes, business premises, care homes, holiday homes, farmland, parking spaces and development land regardless of whether you have planning permission or not, bridging providors will lend on all types of property.


In many circumstances, borrowers can even secure a bridging loan that is in a poor state of repair, derelict or needs demolishing.


Subsequently, bridging loans are an ideal alternative for property developers that intend to invest in property or land that is in need of restoration and can be sold for profit at a later date.


In rarer situations, other valuable assets will also be considered. This includes jewellery, gold bullion, precious gems, watches, vehicles, antiques, boats and valuable art.


Lenders secure the loan by taking a charge of the assets until the final payment is made. This is usually when the sale of a property is completed and the borrower receives capital from the sale of their property or other assets.