6 Golden Rules For Bridging Loan Applicants
Lenders give bridging loans as short-term funds to borrowers who can’t access their money because it isn’t readily available. For example, a bridging loan can help you buy a new property while awaiting proceeds from a property sale. Bridging finance has a lot of benefits, but securing it is does require research. You are likely encounter costs and discover possible limitations during the application process that will shape your final decision. Here are 6 golden rules for bridging loan applicants worth knowing.
1. Don’t Be Unclear Or Secretive
Experts agree that to increase the speed and likelihood of completion it is essential to communicate clearly during the application process to boost your chances of getting a bridge loan. Consequently, be transparent and let your lender know about your specific circumstances and any relevant present and past difficulties that can shape their decision. Likewise, avoid being secretive during your loan application. When applying, the information you provide influences your loan’s terms and other vital details. Therefore, tell your lender all they want to know without withholding anything, including your loan’s purpose and your true financial situation.
2. Avoid Being Disorganised
The last person lenders and brokers want to deal with is a disorganised borrower. Therefore, prepare yourself adequately before approaching any lender or broker to increase your chances of success. Before applying, you must know essential details about your bridge loan, such as how much you require, what you will use it for, and your repayment plan. Then, contact your lender to determine whether your application has been completed correctly.
3. Conduct Extensive Lender Research
Trusted brokers like Finbri can connect you to lenders providing bridge loans with varying terms and conditions. Some loans may appeal to you more than others, so it is prudent to research your lenders to discover those offering the best deals before applying.
4. Discuss Exit Strategies
It is vital to note that your bridge loan’s repayment plan limits its effectiveness. This repayment plan is crucial to the application process because it informs lenders about your approach to paying back what you owe as fast as possible. This plan is your loan’s exit strategy, and lenders will typically require it to prove your repayment ability.
5. Be Open-Minded
Lenders typically want to learn any relevant information concerning your loan when finishing your application. Therefore, expect a lot of questions, including ones about your financial records and what you intend to use the money for. As stated early on, what you say can determine your application’s success. As such, be honest throughout and respect your lender’s advice.
6. Stay On Top Of Timelines
It is vital to have a practical timetable and steady cash flow when applying for bridging finance. These loans are limited-term, so determine when you will repay it and other costs with a bridging loan. Your best bet is to create a practical timetable to have ample time to repay what you owe. However, consider this ahead of time after deciding whether you can finish the work on time and repay the loan within the one-year term.