How long does it take to get a bridging loan?
Bridging loans are usually arranged very quickly because they are often required to meet an unexpected short-term financing need.
Typical uses of a bridging loan is to bridge the gap in the following situations:
- between selling one property and buying another
- auction finance
If you know someone who has used a bridging loan in the past, you could ask them how long it took for their application to be processed after the initial enquiry was made and before funds were available.
There's many bridging loan brokers and lenders who market themselves as being able to complete bridging loans in incredibly short time frames - some in as little 3 days. Whilst we're able to arrange loans of up to £200k within 3 days in order to fulfil that time scale the following has to apply:
- The property that will be used as security is residential, in a popular location and not next to a major trunk road or motorway. This allows for a desktop valuation to be used instead of a traditional in-person visit.
- The broker has a established relationship with a panel of lender's and understand's their criteria and lending risk so no time is wasted identifying potential funders.
- The lender is motivated to make an immediate lending decisions.
- The borrower is in a position whereby they can provide all the necessary paperwork immediately including proof of address, statement of assets and liabilities, a copy of their Experian credit report. This means that the lender's risk team are able to complete their checks and approve the loan very quickly.
- The borrower is also motivated, easy to reach and answers all questions in a prompt manner.
- Both the borrower and the lender use the same solicitors, known as dual-representation.
What questions will the application form ask?
A typical application form can be several pages long, if you're struggling to understand how to answer any questions on your loan application form the fastest way to resolve it is to speak with your broker or lender as soon as possible. Clearly you should always answer truthfully and completely. Save yourself some time and get a head start. Here's a list of the questions you'll likely need to supply answers to:
- Applicant details - such as:
- full name, residential address, postcode, time at address, and if you've been there less than 3 years, you'll need to provide 3 years of previous address history.
- residential status, NI number, employment status, occupation (job title & nature of business), length of employment, annual income, dependent children & ages, additional income, date of birth, nationality, marital Status, phone, email, any previous names.
- Company name - if the loan is going in a company or SPV.
- Loan details - such as:
- Net loan required, term, whether the loan will be a 1st charge, 2nd charge, 3rd charge or equitable charge, time constraints & reason, purpose of borrowings, repayment proposal.
- Security details - such as:
- Address 1, postcode, property type (residential, commercial, semi-commercial, land), rental income if any, number of bedrooms, title number, estimated market value, equity, property description, selling agent, selling contact name, contact phone, whether the property ever been used as main place of residence by applicant or close family member, whether the applicant will or does reside at the property.
- Solicitors details - if you're not opting for dual representation then you'll need to supply this such as:
- Name of company, SRA manager, address, postcode, contact name, contact phone, contact email.
- Credit history - such as:
- Whether you've ever been convicted or have a criminal record, whether you had any court order been made against you or any companies, whether you’ve been directors or partners of a company, whether you have ever been declared bankrupt, the subject to an IVA or made any composition with any creditors, whether you have had any arrears on any mortgage or credit agreements.
- Company / SPV Details - (if applicable) such as:
- Name of company, registered address: postcode, registration number, date of registration, director name(s), shareholding %, business type, length of time trading.
- Accountant - such as:
- Name of company, address, postcode, contact name, contact phone, contact email.
How to choose the best bridge loan?
It is best to compare bridge financing from multiple lenders wherever possible to obtain competitive quotes.
How much do people usually borrow
Bridge loans usually range between £20,000 and £5 million. How much security in the property you own will determine the loan amount you can borrow and the rate for the bridge loans you will have.
What's a duration of a bridging loan
The duration or length of the loan is called the term, and it can vary from one month to two years.
Auction finance loans must be completed within 28 days
If you win the property at auction you'll need to make payment within 28 days of the sale date. A bridging loan can be used to settle the payment whilst longer term financing is arranged.
Is a bridging loan quicker to arrange than a standard mortgage?
Standard mortgage approvals typically require around 18 to 40 days to get approved which is considerably longer than a bridging loan.
What is the maximum LTV for a fast bridging loan?
The LTV of the most bridging loans can range between 65%-80%, so you have to have at least 20-35% equity in the property. The property type being used as collateral will affect the LTV, with some properties being more high risk than others, for example, commercial property such as a gas station or restaurant, LTV may be lower. Generally, there can be higher LTV bridging loan amounts of up to 100%, although this typically means adding more property as security.
How much will a bridging loan cost?
Short-term loans are always expensive compared to longer-term financial products like traditional mortgages. Interest rates varies greatly according to the particular case however current rates range from 0.45% to 1.50% per month with higher rates in complex cases.
There is now a growing number of lenders in the industry that offer a wide range of charging structures. Speaking to a broker will help you understand the various financing options available to you.
Speak to an expert bridging finance broker
If you are interested in getting a quick bridging loan you can contact us for more information. We can package up your loan in a way that makes sense to our lenders and because we know the right lenders to approach we often receive multiple loan offers which helps you get options.
Can I get a quick bridging loan for a buy to let property?
A bridge loan can be made to a property investor and buy-to-let financing can be made for that property. Sometimes this is called a bridge to let application. Lenders offering such loans can give you a decision in principle for the loan before the loan is completed.
Can I get a quick bridge loan if I trade as a Limited company?
Yes, you can obtain fast bridging loans from any lender that is a Limited company as long as it has assets and an exit strategy. Most lenders treat their applications may request personal assurances or guarantees from the directors. Your choices of lenders are wider if your company is a specific purpose vehicle (SPV).
How long does it take to get a bridging loan?
How long should a bridge loan take for borrowers with limited income? A significant advantage in applying for bridge financing is the speed of arrangement - even if you have limited income. This is because the loans we arrange are secured on property.
With the most straight forward bridge loan applications, the conditional offer also known as the agreement in principle, can be made within three days of contacting us. Complex cases may last three to four weeks instead of days, however it'll likely be quicker than alternatives.
How to get a bridging loan as quickly as possible?
Most bridging loans lenders state that they provide quick funding, but in reality not all can. By choosing an inexperienced broker, or one that's just not that good, it can actually delay the process. Similarly choosing the wrong lender can be detrimental which is why its great to have multiple lenders interested in the loan. This is another benefit of a broker as its our job to obtain the most competitive quotes from the whole of market.