How fast can I get bridging finance?
Every so often, a report will come out of a bridging finance application completing in 24 hours. The reality is that this is very rare. A realistic timescale for a bridging loan is 5-10 days, with 7-14 being far more common.
Some of the cheapest lenders undertake a far more rigorous application process and can take 14-21 days to complete an application.
We can usually give you an indicative agreement in principle within 1 hour and credit backed finance terms within 4 hours.
What can delay a bridging finance application?
Numerous factors affect the time taken to complete an application. Some lenders can complete applications far quicker than others.
There is often a conflict between securing a short-term loan as quickly as possible and securing the lowest interest rates. Like any other type of lending, bridging finance is priced according to the level of risk to the lender which will affect repayments and available interest rates.
For an application to complete in a matter of days, the lender would have to complete very few checks. For instance, thorough valuation reports can take some time to complete, which is at odds with the need to complete quickly. As such, some lenders will forego a survey report in certain circumstances.
The same can be said for legal searches, these can take a couple of weeks to come back. To get around this, some lenders will accept title insurance as a replacement.
These factors can shave a huge amount of time off the application process, but this comes at a cost. They greatly increase the risk to the lender, as they reduce their understanding of their security property.
By increasing the risk to the lender, naturally, this will, therefore, increase how much you’ll need to repay.
How should my application be managed to ensure it completes quickly?
Your lender and broker play a key role in ensuring your application is completed quickly, but there is only so much they can do. The approach taken by the borrower is equally important to ensure quick completion.
When a lender begins a full application after approving a new loan in principle, they will let you know exactly what is needed to progress to a full offer. These will usually be documents such as confirmation of ID, confirmation of your exit strategy (how you intend to repay the loan), a property valuation report etc.
To progress matters quickly, all items requested must be sent back immediately, as any delays will directly prevent the progress of your application.
Another area that often slows down applications is a poor choice of solicitor.
How do I find the right solicitor?
Bridging loans are a specialist product and the process of arranging one is quite different from that of arranging a mortgage. Your solicitor must also be experienced in arranging this type of finance.
There are several ways to prevent issues with your solicitor upfront. The key ones are:
- Directly ask your solicitor about their experience in dealing with bridging. Both the practice and the individual that you’re dealing with must both be highly experienced.
- Ask for examples for specific examples of when they have successfully arranged bridging finance previously.
- Be clear on how quickly you would like the application to complete. In this situation, people often say ‘as soon as possible’, but this is counterproductive. In reality, it is often disregarded. Be clear on the date that you’re aiming for, and if appropriate, any hard-borrowing deadlines that you’re working to that must be adhered to.
- Ask about your solicitor’s workload. It is often the case that the person acting can undertake the work but does not have the time needed to give the application the attention that it needs.
How you can speed up completion of your application
The key here is asking the questions of your lender or broker upfront. The things mentioned above are the areas that tend to cause delays, as such, clarity should be provided on what is needed at the beginning of the process.
As an example, some key questions that need to be asked are:
Do you require a full valuation report? Where one is needed, ask when the appointment can be booked and what the turnaround time is for the full report to be issued.
Are full searches required, or will a search indemnity policy suffice?
What information is needed to prove my exit?
When can I get a full list of underwriting requirements?