The Do’s And Don’ts Of Applying For Bridging Loans | Although the application procedure for a bridging loan is simple, it does come with conditions and costs to consider when looking at your security and exit strategy. These are items you’ll need for a bridge loan, in addition to other factors to consider.
Applying: The Do’s
We’ll go over some of the things you should do or consider while applying for a bridging loan.
- Be Realistic
Make sure to be realistic throughout the valuation and consultation stages of the procedure.
The lender will want to know all there is to know about you as soon as possible after receiving your loan application. This covers anything from financial history to what you intend to use the money for.
Bridge loans will be offered on predetermined conditions, which have been agreed upon and are based on the data supplied during the consultation and appraisal. Make sure you’re as accurate with the information you provide as possible when submitting a bridge loan application.
- Consider Timescales
Another factor to consider when applying for a bridging loan is to be sure you have a reasonable timetable for the project and the loan. They are short-term, so you’ll have to agree on when the loan and extra charges will be paid back with a bridging loan.
The greatest option is to establish a realistic timetable for yourself, giving you plenty of time to finish it and pay it off.
However, this should be discussed with the lender, but it is something to think about beforehand and whether or not you can finish the job and pay it back in a year.
- Choose A Good Lender
Each lender has its own criteria and conditions, some with better rates than others. Make sure to go on the market and do some research into which lender is ideal for a bridging loan; each may be slightly different. Reputable lenders include the likes of Finbri.
- Have An Exit Strategy
It’s important to remember that a bridging loan is only as good as the strategy you have in place for its repayment. You won’t get anywhere without this, and it details how you intend to repay the loan fast.
This is your exit strategy for the loan, and it gives the lender comfort that you’re prepared and know how you’ll repay the debt.
- Have Security
Some form of security is required by all lenders, and this is often an asset with equity or worth, most typically a property you currently own.
Applying: The Don’ts
We’ll now have a look at what you shouldn’t do when applying for a bridge loan.
- Hide Important Information
When applying for a bridging loan, you should not hide anything from the lender. You should always be truthful about anything they ask you and your finances, as well as the loan’s purpose.
Because the application, appraisal, and consultation are all utilised in determining a loan’s terms, it’s critical to be upfront with them about everything.
- Forget To Plan
Also, make a list of the bridging loan’s details, such as how much you’ll need, what it will be used for, how you’ll pay it back, and what kind of security you’ll need. The last thing you want to worry about is getting to the app, discovering that you don’t have an exit strategy, and so on.
- Communicate Poorly
Good communication is key – your lender must be aware of any problems (past and present!). That’ll help to make the application process as smooth and successful as can be.
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