The eligibility of a bridging loan is based on your own personal circumstances and also the property you wish to purchase, your plans for it and its potential growth value.

Some essential things you need to be eligible for a bridging loan are:

  • Identification and address
  • Financial statements
  • Details of the property and the opportunity
  • Clear overview of costs
  • Clear exit strategy

Identification and Address

  • Proof of identity, such as a passport and driver’s license
  • Proof of address such as recent utility bill 

Financial Statements (may include)

  • Bank statements last 3 months (individual or business)
  • Proof of income
  • Details of outstanding mortgage
  • Evidence of assets and liabilities
  • Recent business accounts

Property Details

  • Details of the property you plan to buy or develop e.g address, written offers
  • Details of auction purchase (if applicable)
  • Details of the property you plan to sell
  • Details of any building work i.e costs, timeframes
  • A valuation of the property you are buying
  • Purchase price and property value
  • Tenure

Types of Properties That Can Be Eligible

  • Houses
  • Flats
  • Hotels
  • Bungalows
  • Student accommodation
  • Offices
  • Depots
  • Factories
  • Warehouses
  • Garages
  • Care homes
  • AirBnBs
  • Hotels
  • Airspace
  • Farms
  • Shopping centres
  • Leisure centres
  • Hangers

Exit Strategy

  • Details of renovating the property i.e expected cost, timeframe
  • Details of selling the property  i.e expected value, timeframe
  • Plans for refinancing i.e longer term mortgage, buy to let
  • Details of your property portfolio and prior experience
  • Clear plans with costings, forecasts and financials 

Useful Tips To Be Approved For a Bridging Loan

  • Unregulated bridging loans may offer more flexibility for people with adverse credit histories or those who have less experience in property development
  • Your chances of approval could be higher if your property has great potential value once refurbished or because of its location and demand
  • Having all the details about the property, your financial statements and exit strategy ready will help get your loan approved and funded as quickly as possible

What is a Bridging Loan and How is It Different To a Traditional Loan?

A bridging loan is a type of short term loan that is commonly used to purchase properties under a tight deadline. 

With loans lasting around 12 to 24 months, the funds are transferred upfront in one lump sum and used to help make the borrower a cash buyer so that they can purchase their desired property in weeks rather than months.

A bridging loan is secured against the property in question and the lender may be able to cease this if the loan is not fully recovered. 

Bridging is different to a traditional mortgage which can be longer and harder to be approved for and may even last 25 or 35 years.

Using a bridging loan is about seizing an opportunity – whether it is to buy a very attractive property under a tight deadline or if there is potential to add value to it and sell it on.

Do I Need a Good Credit History To Be Eligible For a Bridging Loan?

Not necessarily. You do not need a perfect credit score or history to be approved for a bridging loan. The loan is secured against a property and therefore the value and condition of this property and its future potential value is very important during the lender’s decision process.

Certainly, if you are applying for a regulated bridging loan against your own home, the lender may run a credit check and be more trusting to those with good or fair credit scores.

With unregulated bridging loans, most UK bridging lenders are willing to take a view on those with less than perfect credit scores – provided that they have strong financial plans and an exit strategy to offer confidence in their project.

Do I Need To Have a Regular Income To Be Approved For a Bridging Loan?

Not necessarily. For some property developers, they may be looking to purchase a property using a bridging loan and flip it as their main form of income. Your previous track record and financial record with other property schemes will often be considered during the underwriting process.

If you are applying for a regulated bridging loan, your income may be taken into consideration as part of the lender’s affordability assessments. 

How Soon Can I Be Approved For a Bridging Loan?

Bridging lenders and brokers can often provide indicative terms on the same day of applying. So if you have a loan amount in mind and how much you can put towards a deposit, you can receive some indicative terms.

To progress this, you will need to provide evidence of plans, costs and an exit strategy and if approved, this will give you a decision in principle (also available in a few days).

Subject to further checks by the lender and liaison with your solicitor, it is common for bridging loans to be approved and fully funded in 2 to 4 weeks.