How Long Does It Take to Get a Bridging Loan?
If you’re considering using a bridging loan to address an urgent financial situation, such as purchasing a property at auction or funding the purchase of a new home while your current one is being sold, you’re probably curious about the timeline involved in obtaining such a loan. A bridging loan can be a useful resource in cases like these. However, one burning question often arises: How long does it actually take to get a bridging loan?
To unravel this query and provide clarity on the matter, keep reading this blog to explore the timeline and factors that influence the process of securing a bridging loan.
Is a Bridging Loan the Right Financial Solution for Me?
Above all else, it’s essential to evaluate whether a bridging loan aligns with your particular financial circumstances. Bridging loans can incur significant costs, rendering them one of the pricier borrowing choices, especially when utilised for extended periods. While some financial advisors have suggested creative uses for bridging loans in house purchasing, they should primarily serve as a temporary bridge until anticipated funds become available. Using them for other purposes can lead to financial difficulties.
Before proceeding with a bridging loan application, you must have a clear exit strategy and a backup plan. This means knowing how and where you’ll obtain the funds to repay the bridging loan and having an alternative source of revenue in case your original plan falls through.
How Fast Can I Get Bridging Finance?
The speed with which you can acquire bridging finance depends on various criteria, and while there have been tales of completing a bridging finance application within 24 hours, such cases are quite rare. In actuality, a more realistic period for obtaining a bridging loan is 5 to 10 days, with 7 to 14 days being more prevalent. It’s worth noting that some of the more affordable lenders may have a more stringent application process, which can delay the schedule by 14 to 21 days.
For a general overview of your potential eligibility and terms, you can usually receive an indicative agreement in principle within 1 hour. If you need more detailed credit-backed finance terms, this can typically be provided within 4 hours.
How Long Does it Take to Get a Bridging Loan?
Now, let’s address the timeline for obtaining a bridging loan. Bridging finance is often chosen for its ability to facilitate quick action, allowing individuals to seize opportunities like property auctions or preventing the loss of a property purchase when their own buyer backs out. However, not all situations requiring bridging loans are urgent.
For example, if you’re renovating a house and need a large sum of money for a short period of time before reselling it, a bridging loan might be a good alternative, especially if you don’t need funds right now. The time it takes to get a bridging loan varies greatly, often ranging from 72 hours to a few weeks. While it may not be the quickest funding option due to its intricacy, bridging loan lenders are skilled at acquiring the necessary information.
Factors Influencing the Duration of the Loan
A bridging loan’s term can be influenced by a number of things. The timing for obtaining a bridging loan varies depending on the circumstances, and the following considerations play a crucial part in determining how long the process may take:
- Lender’s Processes: Each lender may have its own application and approval processes. Some lenders may be able to process loans more quickly than others due to their internal systems and resources. Choosing the right lender can impact the speed of your loan approval.
- Borrower’s Creditworthiness: Your credit history and financial stability can affect the approval process. If you have a strong credit history and meet the lender’s criteria, you may be able to secure a loan more quickly.
- Loan Complexity: The complexity of the loan transaction can influence the timeline. More complex loans with multiple parties or unique circumstances may take longer to process and approve.
- Asset Valuation: The value and condition of the asset being used as collateral can impact the speed of loan approval. A thorough appraisal and evaluation process may be required to determine the asset’s value.
- Loan Amount: The size of the loan can also affect the timeline. Larger loan amounts may require more extensive documentation and due diligence, potentially leading to a longer approval process.
- Exit Strategy: Lenders often require a clear exit strategy, which outlines how you plan to repay the loan. Having a well-defined exit strategy can expedite the approval process.
- Documentation: Gathering and providing all necessary documentation promptly is crucial. Delays in submitting required paperwork can prolong the loan approval timeline.
- Legal and Regulatory Requirements: Legal and regulatory requirements, like property title searches, building approvals, and other permissions, can all have an impact on the time it takes to get a loan.
- Third-Party Involvement: If third parties are engaged in the transaction, such as solicitors or appraisers, their timings might also affect the overall duration of the loan procedure.
- Lender’s Workload: Lender workload and capacity can influence how quickly they can process your loan. Lenders with high volumes of applications may have longer processing times.
If a lender sees a strong credit rating, a valuable and secure asset, a well-thought-out exit strategy, and solid plans for repaying the bridging loan, you could receive the funds promptly. For in-depth discussions on bridging loans or to initiate an application, reach out to FinSpace. Our team can provide comprehensive guidance to help you secure the financing you need within the necessary timeframe.