Yes, it is possible to get a bridging loan with bad credit. We all know that a credit check involves loans. If you have a bad credit rating, then it does not mean you cannot get a bridging loan. The majority of the people face this condition if they face financial crises so that they cannot make their repayments against debts on time.
However, they do not delay their payments intentionally. They may have no job, accident, or medical health conditions. Your previous credit history can affect your ability to take a loan, even if you earn a good salary.
Some people have this factor in mind; they will not be able to obtain a loan with a bad credit history, or their loan application will be turned down. However, it is correct for several forms of loans such as bank loans, credit cards, and mortgages, but bridging loans bad credit is not the same. Read this article till the end to get detailed information about the bridging loan.
What is a Bridging Loan?
A bridging loan is a sort of debt that users take to raise funds for a short time. It is utilized in the house purchasing method when a candidate needs to complete the new house process but is short of money for any reason. These funds are repaid right after solving the payment issues. Some people take this loan when they buy a new home, but they have not sold the old one. Therefore, they are short of payment.
The duration of the bridging loans is for a year or less than it. It is secured against a property and asset. It is simple and easy to apply for this process. Learn in detail about the application of the bridging loan.
What are the Criteria to Get a Bridging Loan?
The bridging loan lenders are more flexible, but they are concerned about the value of the security utilized for the loan. The lender receives a valuation report on the asset utilized as the security. Its value must be equal to or more than the loan amount. They ensure that the lender can sell the property to get funds back if the payment is not made. The property value is more important as compared to the bad credit history.
Some top-rated financers consider providing the bridging loan. In this situation, you need to select a flexible lender to obtain a bridging loan with bad credit. They need collateral in the form of property. On the value of the property, they secure their loan. The borrower and the lender agree to take the property owner if the loan is not paid on time. Some of the important requirements are here that most lenders introduce to candidates.
Bridging loans are an available maximum of one million. The loan size is approved as per the value of the property.
The duration of the loan depends on the lender’s policy. It starts from one year to two or three years. The bridging loans are formed to repay in a short period—the majority of the lender’s finance for a maximum of 18 months.
Bridging lenders need security in the form of the property. On the value of the property, the loans are secured.
These are the basic requirements to obtain a bridging loan. But what if a candidate applies for bad credit bridging loans? Learn more about this factor in the below lines.
Can You Get a Bridging Loan with Bad Credit?
We have discussed this factor that bridging loans are designed for short-term loans based on the interest and the strategy of how you will pay it off. These are the most important factors. A candidate can get a bridging loan with bad credit if he meets the lender’s requirements.
With the poor credit history, the major issue for the majority of the lenders, the important factor is the exit strategy. It is the method by which you repay the loan. Some bridging loan providers refuse to provide the loan if your exit strategy is remortgage. They consider that bridging loans with bad credit makes the exit strategy harder.
What is important for the bridging loan providers?
To lenders, the applicants with a clean credit history are generally more attractive. They go for the agreement and accept their application with the most favourable rates. However, good credit history is not the only thing providers look for. We have discussed that they only prefer to fulfil their requirements.
What is the eligibility for a bridging loan?
Suppose you are looking for lenders to obtain a bridging loan, and you have a bad credit history. In that case, your chances of application approval are higher if you have some positive points such as a solid business plan, strong property value for a security, and a strong exit strategy. Moreover, a healthy deposit can improve obtaining a bridging loan.
What Type of Credit Issues Will Bridging Lenders Accept?
To avoid any issues in the repayment methods, the lenders prefer to go for some inquiries. However, they have the flexibility to check some issues like payday loans, bankruptcy, repossessions, debt management schemes, IVAs, CCJs, Missed mortgage payments, late payments, low credit score, and no credit history.
Non-standard exit strategy
The bridging lenders prefer exit strategy, but they do not consider your application if it gives non-standard exit strategies like inheritance, endowments, investments, etc. In some cases, the lenders charge the interest daily. It becomes expensive and unaffordable for the candidate. You need to provide a strong and standard exit strategy in this case.
If you have any of the issues mentioned above in your profile, you may have a problem obtaining a bridging loan. For the majority of the people, it is important to go for its solution for bridging loans with bad credit. It would help if you took the expert advice of the bad credit broker. They are experts in this field, and they know how to make your application powerful to meet the lenders’ requirements. It allows ease and convenience to all the candidates.