When the need for a bridging loan arises people are often concerned that a poor credit history may cause problems. Well, the basic condition of Bridging Finance is that the lender’s advance is covered by the value of the property being offered to secure the loan.
Bearing in mind that the value of the subject property will always need to be confirmed by a professional surveyor, the lender is not generally too concerned about a bad credit history even though there may be issues with poor credit such as mortgage arrears, CCJ’s and IVA’s.
Remember that we are specifically talking about bridging loans provided by lenders who are willing to lend money based entirely on the value of property. Obviously if you approach your high-street bank you will get a very different response once they discover that you have a poor credit history. Although bridging finance lenders do not concern themselves about the state of the borrower’s credit history they still need to know the background, and would take a very dim view of any attempt to hide or cover-up a problem.
Bridging loans can run from one to twenty four months and of course the lender will want to be assured that funds are going to become available to repay the loan at the end of the term. This is often referred to as the “exit route”. Some lenders have a minimum loan term although this is becoming the exception to the rule.
It’s ironic that bridging finance can be made available precisely at that time when a borrower has been under severe stress as a result of pressure from creditors or other serious cash flow problems. A bridging loan provides temporary relief at this time – making it a fast, flexible and very useful facility.