Can I Get A Bridging Loan With Bad Credit?

One major advantage with bridging finance is its comparative flexibility.  Compared to traditional High Street banks, bridging loan specialists are far more accommodating with the services they provide.

The main difference lies in the fact that each bridging loan application is assessed and scrutinized individually. Personal loan eligibility is subsequently determined by the overall merit of the application question.

But what happens if you present an application to a lender with an imperfect credit history? If your credit score is imperfect or unestablished, how is this likely to affect your eligibility? Of course, there are various ways to rebuild your credit fast.

When Should I Apply For A Bridging Loan?

Bridging finance can be a useful facility when in need of large amounts of capital at short notice. Sums from £10,000 to more than £10 million can be organized and accessed within a few working days and secured against assets of value – typically property.

Designed for repayment over a short period of time, bridging finance can also be highly cost-effective. Interest rates typically start from 0.5% (or less) per month, making prompt repayment the key to getting the best possible deal.

A bridging loan can be used for any legal personal or commercial requirement, with no restrictions on how the money can be spent.

Will I Qualify For A Bridging Loan With Poor Credit?

For applicants with poor credit, eligibility will be determined on the rest of the factors the lender takes into account.

As with all loans and credit facilities, having a good credit history could help you qualify for a more competitive bridging loan. But this does not mean you will be counted out of the running entirely if your credit score is less than ideal. There are several types of loans for bad credit scores.

In all instances, the single most important factor contributing to eligibility is the availability of security. You will need to provide the lender with evidence of ownership of assets with sufficient value to cover the total costs of the loan.

The higher the value of the assets you put forward as security, the more likely you are to qualify for the loan you need. If the value of the assets significantly exceeds that of the loan you are applying for, your credit history may not be an issue.

General Proof Of Financial Status

What matters most to the lender is establishing that the applicant is clearly in a comfortable enough financial position to repay the loan. This is something that can be assessed in a variety of ways, such as obtaining proof of income and evidence of on-hand savings.

Also essential when submitting a bridging loan application is demonstration of a workable business exit strategy. This means when and how you intend to repay the loan, which usually takes place in the form of a lump-sum payment after 6 to 18 months.

For example, a typical exit strategy on a loan used for an investment purchase would be subsequent sale of the property following renovations. At which point, the loan and all associated borrowing costs could be repaid in full, and the remaining profits retained by the borrower.

Targeting The Right Lenders

The UK’s bridging finance sector is populated by a wide variety of dynamic independent lenders. Some of which are more accommodating than others, particularly where mitigating factors like credit ratings are concerned.

This is why it is important to ensure that you target the right lenders with your applications. Just as some specialize in ‘subprime’ applications, such as one for a subprime home loan, from customers with credit issues, others punish imperfections with elevated interest rates and excessive borrowing costs.

Targeting the right lenders means working with a reputable and experienced broker. It is important to bear in mind that many of the UK’s most competitive bridging specialists offer their services exclusively via broker introductions. In addition, it is your broker’s job to negotiate the best possible deal on your behalf when a suitable lender has been found.

Working with a lender can boost your likelihood of being accepted for a bridging loan and help you get the best deal. All while preserving your credit rating from further damage, by strategically avoiding lenders who are likely to turn down your application.

A ‘soft search’ can be conducted before your final application goes ahead in order to pair your application only with those who are likely to give your case consideration.

For more information on any of the above or to get your bridging loan application underway, call today for an obligation-free consultation with a member of our team.

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