Bridging loans are short-term loans that can typically be arranged faster than a standard mortgage. This could help if you find yourself in a situation where you need finance in place quickly to purchase a commercial or residential property, or are waiting for other funds to become available.
Find out how long it might take to get a bridging loan, the reasons your application may be held up, and how to try to avoid these delays.
How quickly can I get a bridging loan?
Bridging loans will typically take anywhere between 72 hours to two weeks to complete, depending on the lender and your individual circumstances. It could take longer or, in very rare cases, a bridging loan has been paid out inside 24 hours.
Generally you can expect an initial decision on a bridging loan application to be made within 24 hours, and sometimes within as little as an hour, but actually getting the money usually takes longer.
What factors can delay a bridging loan application?
There are a few factors that can slow down the bridging loan application process, including:
- The type of bridging loan: Each lender has its own bridging loan application process. Some providers are more rigorous than others. Lenders offering residential bridging loans, which are regulated by the Financial Conduct Authority (FCA) typically take longer to process than unregulated commercial bridging loans. That is because unregulated bridging loans tend to have fewer checks during the application process.
- Property survey/valuation: Lenders will usually require a property survey to be carried out, which can slow down the application process. Although this step may cause delays, it can help to ensure that a fair price is paid for the property.
- Negotiations: It may take longer to negotiate a bridging loan deal, especially for larger and more complex credit agreements. Often bridging loan brokers will need to compare the whole of the market to ensure that they negotiate the best offer with a suitable lender on your behalf.
- Exit strategy problems: It’s important to have a clear exit strategy when applying for a bridging loan. This ensures that a lender knows how you plan on repaying the loan. Any issues with your exit strategy may delay your bridging loan application or result in it being rejected.
- Documentation delays: Any delays in sending the necessary documents for your bridging loan application may slow down the process. It’s essential to have all of your documents ready to go and send them off to your lender promptly.
How can I speed up my bridging loan application?
While the time it takes to process a bridging loan application varies between lenders, there are ways to reduce the risk of delays, including:
- Having all of your documents ready and prepared to send to the lender will help ensure that your application goes through as quickly as possible.
- Choosing an experienced solicitor could also help reduce delays in the bridging loan application process. When comparing solicitors, it helps to ask for examples of their history with securing similar forms of finance for other clients. It’s also worth checking their workload and whether they can complete your application quickly.
WARNING: Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a loan or any other debt secured on it.
Always check whether a bridging loan is regulated or not. To protect consumers, bridging loans on residential properties must be regulated by the Financial Conduct Authority. Bridging loans on buy-to-let, commercial and investment properties can be unregulated.
Image source: Getty Images
Continuous Payment Authority: How It Works
You can use a continuous payment authority to pay for subscriptions and memberships, as well as to repay a loan. Find out how they work and how you can stop a continuous payment authority.