Bridging loans can be extremely useful for those wanting to make a quick land or property purchase via an auction, or from a seller who wants a fast completion. Compared to other forms of financing, bridging loans give you access to high amounts of capital in a short period of time, and in many cases, allow buyers to ensure they don’t miss out on a sale due to lack of funds.
Where mortgage applications and other types of loan agreements may take weeks or even months to go through, bridging loans take just a few days in most cases. Part of the quickness is the easy bridging loan application process, though it does require some preparation on your part. Below, we detail the five easy steps required to apply for a bridging loan.
1. Speak to an expert
The first step in the bridging loan application process is to liaise with a financial advisor or bridging finance broker, like our team here at Aurora Capital. Bridging loans are short-term finance solutions that have excessively high interest rates. For a lot of borrowers, the interest rate, combined with the short-term payment schedule, makes repayments unviable over the long-term.
Companies charge bridging loan interest either on top of your monthly payments (which are likely to be high due to the short terms), or as a lump sum at the end of the term. This is why it’s important to first speak to a financial advisor to ensure a bridge loan is the most appropriate form of funding for your needs.
Whilst a bridging loan application with Aurora Capital won’t harm your credit score, speaking to one of our advisors first will ensure you understand the nature of bridging loans, what is needed for a successful application, and whether or not the decision to get a bridging loan is the smartest move for you at present.
You can also use our handy bridging loan comparison tool to find the best option for you.
2. Assess your credit score
The next step is to look at your credit score. Businesses with good credit scores will always be more likely to get approved for a short term loan, and applying for bridging loans is no different, so it’s in your best interest to have a strong financial history. Looking at your bank statements and assessing your monthly repayments will give you a good insight into your financial standing, but speaking to a financial advisor and getting an accurate idea of your minimum credit score can also help.
That being said, approval for bridging loans isn’t purely based on credit score alone. In fact, most lenders will look at your exit strategy and ability to meet monthly payments over your credit history, so don’t be put off if your credit score isn’t the best, though the higher it is the better your chances of being able to secure bridge finance.
3. Devise an exit strategy
As mentioned, an exit strategy is one of the main components lenders look at when considering a bridging loan application. An exit strategy is a method you plan on using to pay off the bridging loan in full. For most people, this means acquiring a mortgage, selling their property or land, or taking out a different type of loan with more favourable repayment terms.
Your exit strategy needs to be robust, and this is another reason why consulting with a financial advisor is a good first step. At Aurora Capital, we can help you come with an exit strategy in the initial stages of your application preparation.
4. Get all your documents
Next, you’ll want to make sure you have all the relevant documents and information ready to apply for a bridge loan. This includes:
- Business information and contact details
- Details of the property/asset you want to buy incl. address (if applicable) and value
- Any outstanding mortgages etc.
Having all the relevant information to hand will make it quicker to fill out the required forms.
5. Apply for a bridging loan online with Aurora Capital
Applying for a bridge loan online with Aurora Capital is easy. You’re generally looking at filling out a few fields on our online form using the information above, followed by us helping you complete your application. Once complete, you’ll generally hear back within two days, with 5-18 days being typical for the money to land in your account. You can also use our bridging loan comparison tool to find the right bridging finance options for you.
For more information about what bridging loans are and what they’re used for, you can also read our handy bridging loans guide.
If you need any more help with the application process, or are curious if you might be able to secure bridging finance either through unregulated bridging loans or a regulated bridging loan, please contact us today.
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