How Long Does It Take To Get A Bridging Loan?

A bridging loan is designed to be arranged quickly, often to cover an urgent requirement. This makes them an appealing alternative to traditional mortgages.

As such, a question that new clients often ask is how long it will take a broker to complete their bridging loan application.

In this loan guide, we will break down the timescales for applications, the factors that can slow down applications and how the applicant can help us to complete their application quicker.

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 bridging loan 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 bridging loan 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 checks are carried out on a bridging loan application. 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. The documents required will depend on your chosen lenders bridging loan process & criteria.

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.

Are some types of bridging loans quicker than others?

Yes, some types of bridging loan can complete quicker than others. Here’s a quick breakdown of the main types:

• Regulated bridging loans – Regulated bridging loans are those secured against your main residence. These loans can take a little longer to complete, especially if you plan to remortgage as an exit strategy as the lender will need to ensure that this is realistic.
• Unregulated bridging loans – Unregulated bridging loans are those secured against a property that you don’t reside in and are commonly used to finance investment property transactions. These loans can complete very quickly, depending on the lender you choose to work with.
• Commercial bridging loans – Commercial bridging loans are those secured against commercial property such as shops, warehouses, factories or pubs. The main factor that can slow these loans down is how long it takes to get a surveyor to complete a valuation report on the property. We always check this up front to avoid delays before committing you to a lender.
• Development exit finance – Development exit finance is used by property developers to repay property development finance once the build of new properties has been completed. Development exit applications can usually be completed quickly, but do require a full valuation report as there will be no historical data to back an AVM, or desktop valuation.
• Large bridging loans – Large bridging loans, while not specifically a type of bridging finance are those over £1,000,000. These loans usually require a full valuation report but can still complete in under 2 weeks.
• Auction finance – Auction finance is a type of bridge loan that is used to complete the purchase of properties that have been purchased at a property auction. Auction finance is designed to be completed in under 28 days, but can often be completed far quicker than this.
• Property refurbishment finance – Property refurbishment finance can be completed in anything from 5 days to 28 days depending on the level of work to be undertaken on the property.
• Bridging loans to purchase a property before selling your existing one – Bridging loans to purchase a property before selling your existing one allow you to finance a property transaction in a chain break situation. Chain break finance can be completed in under 2 weeks (although the chain may well delay the legal process).

Are some lenders quicker than others?

Yes, there are significant differences between lenders when it comes to how quickly they can complete a bridging loan application.

While some lenders are focused on speed, others offer very low interest rates and as such, have to take a cautious approach to lending.

This tends to slow down the application process as a result of the additional checks undertaken.

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?