Yes, you can get a bridging loan with a poor credit history. Lenders are primarily interested in your exit strategy—how you’ll pay off the loan—and the value of the assets used as an underlying security.
A poor credit history shouldn’t deter you from applying for a bridging loan.
A poor credit bridging loan is a short-term loan secured against a property. Bridging loans are a suitable option when other forms of finance aren’t possible. For example, when the funds are required to purchase a new property but there isn’t the time to arrange a traditional mortgage.
In some cases, a poor credit history may affect your ability to get a bridging loan. However, this does not apply in all or even the majority of cases.
If you have a poor credit history, this may not affect your ability to obtain a bridging loan if your planned exit is the sale of another property. As the interest payments can be rolled up and added to the loan, there is no need to make monthly repayments, so you may be able to borrow the funds in the short term that would otherwise be unaffordable.
The strength of your exit plan is far more important when it comes to applying for a bridging loan than your income or credit history. So long as your property is likely to sell for the expected price during the loan term, you are likely to be eligible to obtain bridging finance.
If your property is at risk of repossession it can be possible to arrange a bridging loan to avoid the repossession and then sell your property for its true market value in order to clear the loan.
A “poor credit history” bridging loan can help with the following situations:
The lender will undertake a credit search as part of the application process but they may ignore certain negatives, such as late or missed payments. However, they will take account of any fraud markers on your record and they are unlikely to lend if these are present.
If your exit is the sale of your property, the lender will undertake checks in relation to the market value of similar properties in the area, as well as how long similar properties are taking to sell in the current market.
If your planned exit is to refinance, the lender will ask to see an agreement in principle from your mortgage lender, possibly along with proof of your income to ensure that the agreement in principle is realistic.
A lender will consider the following types of poor credit circumstances;
Loans are available for clients with adverse credit from £50,000 with no maximum limit. The maximum loan to value that is available to you will depend upon your exit strategy and your financial situation but will typically be a maximum loan to value (LTV) of 75% (the loan-to-value ratio measures the size of the loan against the value of your property).
The range of lenders available to you may be slightly restricted depending on the amount of adverse credit that you have.
However, the interest rate offered may not be significantly affected by having adverse credit as your exit strategy is strong.
Working with an experienced broker like KIS Finance will give you access to poor credit bridging loans at the best rates.
Related articlesLast updated: 23 August 2024 | © KIS Bridging Loans 2024