Bridging Finance
Needing finance quickly and for a short term period even when you have bad or poor credit is something that can be addressed through Bridge finance.
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The Story
Needing finance quickly and for a short-term period even when you have bad or poor credit is something that can be addressed through Bridge finance or often referred to as a Bridging Loan. Situations where a bridging loan might be considered appropriate include the following:
Purchasing an auction property – Completion needs to take place within a short period of the bid being accepted and going for a standard mortgage may take longer to underwrite.
Obtaining funds to purchase a property quickly – It could be because you have sourced a property where the seller needs the purchase to complete quickly and going through a standard mortgage lender’s underwriting process might take too long thus jeopardise the purchase.
Run down or refurbishment property- Some lenders might not be able to lend due to the condition of certain properties, if your plan is to renovate the property in a short period of time with a view to sell it or remortgage it with a standard mortgage lender at a later point in time then you might find that a bridging loan lender has more flexible criteria when it comes to the condition of the property.
Credit or Income Issues- Sometimes it could be that you need to make a purchase, but the current income received does not meet a standard mortgage lenders criteria but eventually this is expected to resolve itself. Likewise, if a customer is unable to get a mortgage from a standard lender due to their credit profile which over time will improve then you might find a Bridging loan can assist in enabling you to make the purchase and then at a later stage apply for a remortgage with a standard mortgage lender.
Customers with current credit issues which over time will improve if given time would meet lenders credit profile criteria
A customer who was purchasing a property at an auction was finding that the standard mortgage lender was taking too long to underwrite.
What Did Cubic Financial Services in Slough Do?
The customer had already paid the deposit which was now at risk if the completion did not happen within a matter of days.
It was also important for the customer that we recommend a cost-effective solution whilst ensuring that the property purchase was not compromised.
It was therefore important that we conduct our research and use our experience to understand the likelihood of the customer being able to obtain a standard remortgage after the Bridging loan term would end.
This was even more important interest rates were at an unpredictable level and because the property that was being purchased was a Buy to Let changes in underlying interest would have an impact on the amount that can be borrowed.
We therefore estimated what we felt the customer would be able to borrow according to the current interest rates and provided full transparency regarding how the subsequent remortgage could be affected by interest rate changes.
We also had a discussion around what the options would be if the remortgage amount at that time was not sufficient.
The Results
This provided the customer with the comfort of knowing that their deposit is safe upfront, they can complete on the property purchase and that later they would be able to remortgage at market competitive interest rates.
