A bridging loan is a short-term funding option that provides finance the gap between a purchase & arranging or being able to arrange a longer-term source of finance. Usually lasting between 3-24 months are worth considering if you require immediate funds to proceed with a new venture while waiting for money. The most common use of bridge finance is to enable you to buy a new property while still waiting for your old property to sell.
But as with any loan, there are numerous criteria and expenses to consider prior to, and during your application. Experts recommend exploring and understanding the relevant factors before making up your mind about whether a bridge loan is your best option. Here’s your bridging loan application checklist.
Things To Avoid During Your Application
Avoid unclear communication when applying for a bridge loan to improve your chances of success as lenders are likely to approve your application if you communicate clearly with them. Clear communication during your application will involve letting your lender know about any present or past difficulties and your current situation. Transparency is vital to a quick and effective application process, so it would be best to prioritise this.
It is essential to understand that the information you give lenders influences key details about your loan terms. You must avoid secrecy during the bridging finance application process if you want to get the the right terms for your situation. Consequently, be honest throughout each stage of the application process by telling your lender what they want to know, especially your reason for borrowing and your genuine financial situation.
Lenders and brokers prefer working with organised borrowers for all types of loan applications. Therefore, being disorganised will significantly hinder your chances of success when applying for a bridge loan. As such, you should know some vital details that will be required of you during the application process, such how much you need, your repayment plan, and why you are borrowing.
Things To Do During Your Application
It is no secret that lenders give bridge finance borrowers varying terms and conditions and a renowned broker like Finbri can connect you to lenders with better loan terms and conditions when compared to others. As such, it is always best to research your options to find a broker that will secure the best bridge loan based on your unique needs.
Your repayment plan is fundamentally the loan’s exit strategy. The plan you select constraints your loan’s overall effectiveness, but it is crucial when applying because it specifies your plan to repay quickly. Any lender will surely demand it to prove your ability to repay before giving you a bridging loan.
Your lender will usually want to learn as much relevant information as possible during the application process. Therefore, they will ask about your financial records and what you intend to use the funds for. It is prudent to be forthcoming with your lender and receptive to their advice to boost your chances of a favourable outcome.
A practical timetable and cash flow can help you repay your loan quickly, so keep this in mind. Bridging loans are limited-term, so decide when to use your bridging loan to pay back what you have borrowed and any additional expenses. Your practical timetable will undoubtedly help you repay on time. However, consider this in advance after deciding whether you can complete the work and pay it back in 12 months.
