Bridging loans can be extremely useful for a property investor, especially those that require chain break finance or urgent cash for purchasing a property at an auction. However, it is important that you go through a checklist, like the below, to ensure that you have everything to meet lenders’ loan eligibility criteria.
Here is what is typically required in order to apply for a bridging loan:
Can You Get a Bridging Loan?
Some lenders will offer different things when it comes to bridging finance, although, there is a list of generic, required information that will satisfy the majority of bridging lenders in regards to the data that they would need to offer terms or issue an Agreement in Principle. This includes:
A brief background as to why you need the funding and what you’re going to be using it for. This should outline the purpose of the loan and circumstances.
The lender will want to know some of your personal details. Some of these include:
- Full name
- Date of birth
- Current address
- Annual income
- Employment status and details
- Other owner properties
They will also require the information on the property that you intend to purchase. The information that they would want includes:
- Security address
- Type of property
- Purchase price and property value
- Tenure – Freehold/leasehold
If you’re planning on using your bridging loan to refurbish a property, then you may also be asked for:
- The proposed works or refurbishments to take place
- The cost of works
- The property value once works have been completed
Alternatively, refurbishment finance could also help. For more information, click here.
As well as of the above information, you may also be asked to present some documentation. Some of these may include:
- Documentation that shows proof of address
- Driving licence or passport that shows your full name
- An AIP for the follow-on mortgage
- A property portfolio schedule (if you own any other properties)
- A detailed schedule of works - costs and timeframes including planning permission
- Bank statements from the past three months
Loan Request Details
Of course, the lender will want to know more details about how much you would like to borrow. While most lenders can go up to a maximum LTV of 75% of the gross loan amount, some finance brokers such as Pure Commercial Finance can find you finance that goes higher, if needs be. This includes any retained interest for the term of the loan and any broker fees.
The lender will also want to know how long you would like this loan to be for. Although regulated loans are usually capped at 12 months, the bridge can be paid earlier, and it does not have to be held for the full term.
The last thing that they will want would be an exit strategy, and it can be the decider on whether you receive a bridging loan or not. The exit is usually the sale of the property or refinancing on to a long-term deal such as a commercial or residential mortgage.