Applying for A Bridging Loan With Bad Credit

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Can I Get A Bridging Loan With Bad Credit?

Yes, previous credit problems are less of a problem when taking out a bridging loan than with other types of borrowing. This is because the interest rates, arrangement fees and other costs are often rolled into the loan terms, meaning the lender is not reliant on you to make monthly repayments.

Bridging finance is a short-term product, designed to bridge a gap between an event and the sale or refinance of a property. The key to the lender being paid back on time is your ability to refinance or sell the property, rather than keeping up monthly repayments.

As such, your credit history is far less important with a bridging loan application than it is with a mortgage (a longer-term loan) or secured loan, especially with an expert broker on hand to advise.

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Latest Bridging Loan Offers When Applying With Bad Credit

View some of the latest offers from leading lenders.

Product BL0001 - Apply Now
Interest Rate
0.44%
Lender Fee
1.00%
Max LTV
55%
Security Type
Residential
Min-Max Loan
£250,001 - £50,000,000
Max Term
18 Months
Regulated Accepted?
No
Product BL0002 - Apply Now
Interest Rate
0.44%
Lender Fee
1.50%
Max LTV
55%
Security Type
Residential
Min-Max Loan
£100,000 - £250,000
Max Term
18 Months
Regulated Accepted?
No
Product BL0003 - Apply Now
Interest Rate
0.47%
Lender Fee
1.00%
Max LTV
50%
Security Type
Residential
Min-Max Loan
£250,000 - £50,000,000
Max Term
12 Months
Regulated Accepted?
Yes
CLICK HERE TO COMPARE MORE MARKET LEADING PRODUCTS

What Checks Will The Bridging Finance Lender Carry Out?

The lender will still do credit searches on you as part of the process, although they may choose to ignore negatives on there. This allows them to check for other issues such as fraud markers on file which, if present, will be frowned upon and make lending much less likely.

The main checks that the lender will focus on are, as stated above, are around evidence of being able to meet repayments and the exit strategy of the bridging loan. Where you are planning to sell the property, the lender will look at the sale prices of other properties in the area, along with the average time taken to sell a property in the area.

Where the sale of the property is your preferred exit route, the lender will focus on ensuring that your refinance is realistic. They will do this by requesting a copy of your agreement in principle (AIP), and often by requesting proof of other documents such as proof of income to ensure that you can repay and that your AIP is realistic.

Whichever exit route you decide to take, the valuation will be a key factor to your finance application, should the lender require one. If you need more information on what checks are needed and the funding options available – our team of specialist brokers is on-hand.

Will I End Up Paying More For Bridging Finance Because Of Bad Credit?

The options available to you when looking for a bridging loan maybe slightly restricted depending on the level of adverse credit you have. That said, the difference in the product you end up with may not be as big as expected and in some cases, bad credit may not increase the cost of your bridging finance at all.

The rate you will pay depends on several factors. Depending on your circumstances, your credit history may be ignored.

What Types Of Credit Problems Will Bridging Loan Lenders Consider?

Bridging finance lenders are generally very flexible and take a common-sense approach to lending. As such, they will consider most circumstances, including:

  • Defaults
  • CCJs
  • Mortgage arrears
  • Bankruptcy
  • IVAs
  • Debt management plans
  • History of payday loans

Bridging Finance For People With CCJs And Defaults

As mentioned above, CCJs and defaults won’t necessarily increase the cost of your bridging loan. We can still arrange bridging finance for those with CCJs and defaults up to 80% loan to value (LTV).

Some lenders will view CCJs and defaults more favourably if they have been satisfied either prior to, or as part of the application.

Can Bridge Loans Be Used To Stop Bankruptcy proceedings?

Yes, if there is sufficient equity in your property to raise funds through a bridging loan, then some lenders will allow you to borrow to stop bankruptcy proceedings.

This is a specialist area and it would be better to discuss your specific circumstances with an expert rather than taking general advice online.

Can I Use Bridging Finance To Avoid Repossession?

Yes, there are a number of lenders who will lend to avoid repossession. Usually, when your current lender is seeking repossession, payments have been missed on the current mortgage, so the exit will be especially important here.

Again, this is a very specialist area and it would be wise to take specific advice on the options available to you.

about-the-author-gary-hemming

About The Author

This content was produced by our Commercial Lending Director, Gary Hemming. Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business press as well as local and national press.

Gary Hemming CeMAP CeFA CeRGI CSP  -  
Commercial Lending Director

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