When an individual is looking for short-term financing to help bridge a financial gap, bridging loans may be a more feasible option. This financial solution offers applicants immediate capital that can be secured using property that is owned and also offers flexible terms and repayment options.
Before applying for this type of financing, there is some important information that you should know.
Applying for Bridging Finance
When beginning the application process for a bridging loan, it is important to have certain information available during the initial conversation with your lender.
The information that should be on hand includes the applicant’s full name, address, information on the security property used to apply for the loan, the property’s appraised value, solicitor’s information, and the amount of money that is being requested. All of this information will be important to the lender when considering the application.
In the best cases, an initial Decision in Principle or DIP will be available to the applicant in as little as 24 hours.
When the borrower has reviewed and agreed to the outlined terms of the loan, he or she will then need to provide a certified copy of his or her passport and current utility bill.
In the final stages of the loan approval process, the applicant will be asked to pay any initial fees or upfront costs which are outlined in the lending proposal. From here, the applicant can expect to receive their loan in 7 to 14 working days.
Initial Fees Associated with Bridging Finance
Lenders will generally incur some kind of costs when it comes to accepting and processing an individual’s loan application. As part of arranging the applicant’s loan, lenders will generally ask that these costs be covered by the applicant.
Any upfront or initial fees will be outlined in the lending proposal and can include legal fees, valuation costs, and/or application fees.
These fees are generally presented and described to the applicant before he or she agrees to the overall terms of the loan.
Security Types Used with Bridging Loans
Depending on the applicant’s unique situation, long leasehold or freehold properties can be used as collateral to secure the bridging loan.
If the loan is being requested by a business or company organization, the lender may require the applicant to submit a debenture or personal guarantee in addition to security.
Terms of the loan will also vary depending on the applicant’s situation – repayment periods can range from 30 to 90 days and can even be extended to up to one year or 18 months.