Bridging finance is a new wave in the loan market that defines itself as a gap financing arrangement and a short-term loan to satisfy immediate and liquidity requirements for small duration. People also call it as bridging loans. It is designed for the borrowers who in anyway are investing in property. From home buying to home renovation, any kind of investment on property can be funded by these loans.
The key reason to approach bridging finance is its capacity to provide huge amounts in a short span of time. Besides, when in some particular situations, the traditional banks deny to provide funds, one can keep hopes from bridging finance. Those situations are mentioned below –
- When an applicant is older than the acceptable age limits for mortgage
- The applicants, who have poor credit and cannot qualify for a mortgage loan
- If the property is not according to the set standards. For instance, a house without bathroom or kitchen
- When the applicant does not have enough income proof or regular income
- If the funds are urgently needed for a specific requirement what may be not allowable in mortgage financing. For example, an immediate flow of money for the business.
What stops you from qualifying for bridging loans?
Applying for bridging finance and getting them can be simple but they are not as accomplishable as applying for some unsecured personal loans. Few particular conditions can really create an obstruction while availing the loans. These are – Worst credit scores, which make the lender doubt on your creditworthiness, and they may not lend you. Having no income proof as well as absence of proof of collateral to provide as security, is another obstruction for a borrower.
Types of properties that a borrower can present as collateral
This is something that totally depends on the lender’s policy, but the general practice allows some certain properties as the collateral. These are – primary residences, building plots, mixed use developments, and commercial buildings.
Lending platform matters in achieving an approval
There are varied bridging loan options in mainstream as well as online lending market. However, both work on different strategies. An applicant in hope of some flexibilities and instant money can approach the online lenders to avail these funds. There are some lenders, who can provide funds without much hassle and even with no guarantor. The lenders of unsecured loans for bad credit people with no fees and no guarantor have a considerable share in the loan market. A bad credit borrower can avail funds without a co-applicant. He just needs to provide collateral that has equal or more worth as compared to the amount borrowed. For a bad credit borrower, it can be a good deal. If fortunate, he may even get customisation of rates and repayment schedules.
There is a big change in the lending market after the rise of the concept of bridging funding.