Bad credit bridging loans .

Discover how Hank Zarihs Associates has helped clients secure tailored financial solutions for property investments and developments. From urgent bridging loans to large-scale development financing, our case studies highlight success stories that showcase speed, expertise, and client-focused outcomes.

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When it comes tom accessing a loan, bridging loan, bridging finance or other types of loans, low credit or adverse credit can be one of the biggest stumbling blocks to getting the finance you need.

There can be a variety of reasons why a client may have adverse credit or bad credit, and given the recent economic circumstances across the country you certainly wouldn’t be alone in that respect, with the Bank of England estimating a growing number of consumers have experienced a bad credit event over the past 2 years.

That being said, adverse credit or bad credit needn’t get in the way of you accessing bridging finance, depending on your circumstances and what you’re looking to access a bad credit bridging loans for.

More often that not, bad credit isn’t attained purposely or even through situations that our clients can control, and although they earn a good salary and have a good track record of business success they often find themselves refused for credit or for loans despite this.

Luckily, we’re able to give you free advice around this and look at the options available for you, perhaps with a bad credit bridging loans or other types of loans. We’re confident that even if you’re suffering from bad credit we can find a solution for you, and we’ll explain why bad credit doesn’t always exclude you from credit or bridging finance.

Can I get a bridging loan if I have bad credit?

In short, yes you can. Bad credit is subjective, after all, and many lenders have different criteria and different expectations when it comes to what they consider credit worthy and what they consider to be a risk.

There is, however, a key difference between, for example, a commercial mortgage and bridging finance. When it comes to long term finance or loans, the lender will often want reassurances that the client can commit to their repayments over a long time, sometimes with little security should the loans default.

With bridging finance it’s different in that the lender only wants the loan covered by an asset or by security. If that criteria can be met to differing degrees then many of the lenders on our panel will consider providing bridging finance.

Do lenders do a credit check?

Yes, most lenders will perform a credit check when vetting you for loans or bridging finance. This gives them a better idea of what your repayment history is like and they will obtain this, even bad credit, from the credit reference agencies, all of whom will provide you with a copy of your credit report online.

Some will charge you for a more detailed overview of your credit report but all will provide you with a copy of your statutory credit report if you ask for it, as they’re required to do so by law.

Bad credit needn’t exclude you from bridging finance, however, as most bridging loan companies use this as a starting point and will then look at other factors such as the security you’re able to provide and your track record in business or property development.

What do lenders check?

When it comes to a credit check, there are a few things that most lenders will want to see. Firstly, they want to know that you’re on the electoral register and how long you’ve lived at your current address.

Secondly, they’ll want to know what your payment history is like on your other accounts. If you’ve missed payments on your credit card, for example, this will mean bad credit as you’re unable to keep up to date with payments. If you’ve missed 3 payments or more this often means that your account has gone into a default, and these badly affect your credit report.

Lenders will also look at things like how often your credit file has been searched, indicating you’re desperate for credit, whether you’re using all of your available credit limit, suggesting you’re struggling, and whether you’ve opened up many accounts over recent months, indicating you’re desperate for credit.

That’s traditional lenders, however, and when it comes to bridging loan lenders they’re a little different in that, although they’ll take similar stuff and bad credit into consideration, it often isn’t the most important aspect of their decision.

What might cause lenders to say no to bridging finance?

Each of our lenders have different criteria and so it’s always worth seeking the advice of one of our brokers before looking to apply, however, there are some eligibility criteria that may mean you don’t receive an offer.

If you’ve been declared bankrupt, have an unsatisfied bankruptcy or a debt relief order or IVA this is very likely to mean that lenders won’t be able to fund you. Similarly, if you have no security or assets to provide security against your loan as well as bad credit then your chances of funding are slim.

Bridge Loan Calculator – Work out how much you will have to pay back

If you’re looking for a bad credit bridging loan, or a bridging loan more generally, then the easiest way to see if you’re in a position to repay the bridging loan is to use our easy calculator which can show you how much your loans would cost.

Simply enter the requested details to get a good idea of what the cost would be.

Can I get a bridging loan with a no deposit?

In some circumstances yes you can, but this is a specialist area and you’d need to seek the advice of one of our brokers first to double check whether you might qualify for these types of loans or a bridging loan.

Some lenders will offer 100% Loan To Value (LTV), but again this will depend on your income, track record and also what type of security you can provide against your bridging loan.

If you’re able to provide an asset against the bridging loan or loans you’re looking to agree that covers most of the value then you’ve got a good chance of being able to agree funding.

I’m bankrupt, can I get a loan?

This is a specialist area where we highly recommend that you seek advice from one our experts who can guide you through this process, however, yes there are situations where you may be able to secure a bridging loan or loans even whilst bankrupt.

It’s not particularly easy but there are certainly lenders who may be willing to approve lending for you for some types of loans or a bridging loan.

Non status bridging loans

A non-status bridging loan may be a good option if you have bad credit as they are specifically designed for property developers who may have a poor personal credit history or bad credit.

They are a specialist type of finance that are for residential property developers to raise finance, release equity, and also means that lenders are willing to take on a higher risk appetite with their clients.

What impacts my eligibility for bridging finance?

Generally speaking, bad credit won’t necessarily affect your eligibility for bridging loans too much compared to other areas, so here are the 4 main areas that may affect you over months for a property development, for example.

Exit strategy

Broadly speaking, because bridging loans are designed to be short term, you’ll need to show your lenders that you have a solid, costed and reasonable plan to pay your finance back in the time period agreed. This could be, for example, a business plan.

Property Value

If you’re looking to use bridging loans to purchase a property either for development or for another reason then you’ll need to display to your lender what the value of the property is. That may come in the form of a valuation or a survey or may come in the form of a desktop evaluation where you can send pictures of the property to an evaluator for an instant appraisal.

Existing Mortgage

If you already have a mortgage on a property, either residential or commercial, this can affect your eligibility by either showing your lender that your payment history is good and that you’re able to manage your debts well and responsibly, but also it could improve your chances by giving you an asset that you can use as security against bridging loans.

If you use an existing property with a mortgage as security, this is known as a second charge loan and this would entitle your lender to seek to claim your property as payment if you were to fail to repay the bridging loans on time.

Poor credit

A poor credit history won’t necessarily disqualify you from getting a bridging loan, however, it may affect the rates you get in interest and also the terms of the loan.

If there are a few blemishes on there then the chances are that it won’t make a huge difference and the lender will be willing to overlook this in favour of a good business plan, strategy and exit strategy as well as good security on the loan.

The best advice is to speak to one of our brokers who can go through the process with you in detail and assist you further.

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Shiraz Khan
Stay informed with the latest news, market trends, and expert guidance on bridging loans, development finance, and UK real estate investment. Our blog is here to support your property journey with clear, practical advice.
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Frequently Asked Questions

You may have heard about bridging loans in the context of property investment or moving house, but what exactly are they? Basically, bridging finance is a type of short-term loan that allows a buyer to purchase a property before their existing home or investment property is sold. As the name suggests, it ‘bridges’ the funding gap in the lag between purchase and sale – offering rapid access to the necessary purchase funds for a brief period of time.

Borrowers can access from £5,000 to £250 million, depending on applicant status, the value of the property and other lender criteria. Higher lending amounts are typically reserved for borrowers who can put up several properties as security. Quotes are provided on a Loan to Value (LTV) of 65%-80% in most situations.

Bridging loans can be used in a number of situations. For example:

  1. When people are moving home in a chain, with a gap between completion dates (e.g. needing to pay for the new property before receiving funds on the completed old property).
  2. When property investors or private buyers renovate a home and want a rapid sell-on.
  3. When an individual is looking to buy a property at an auction.
  4. When property investors and developers are looking to pay a tax bill
  5. When buyers want to secure finance against an uninhabitable property.

This type of finance can be used by homeowners, landlords and property developers alike.

The bridging finance market has grown rapidly, with a number of small and focused lenders now on the market, catering for specialist property finance needs. The market has changed because large high-street lenders have become less willing (and sometimes less able) to lend ever since the financial crisis of 2008.

As to whether a bridging loan for property development, auction purchase or private home buying is a good idea, it depends on a variety of factors. Bridging loan requirements vary by lender, but each will have certain common features that need to be considered.

The most notable feature of this type of finance is that the interest rate is likely to be high. At the same time, there are typically high administration fees applied to the loan. Because of this, it is essential to proceed very carefully and with a full view of the facts. Borrowers have been burned by this type of loan in the past, in instances where transactions have fallen through, or where lenders have turned out to be unscrupulous and untrustworthy.

Benefits of instant bridging loans

1. Rapid access to money
2. Ability to borrow large sums – often up to £250 million depending on applicant status
3. Options for flexible borrowing.

Possible downsides of bridging loans:

1. Failure to understand the unique features of these loans can result in financial risk
2. Bridging finance is secured against your property; meaning it can be sold if you can’t meet the repayment terms
3. A costly option with fees and higher interest

Bridging finance interest rates will vary by lender. However, interest costs of 1.5% a month are not unusual, which can equate to an annual percentage rate of 18%.

Bridging loans may have fixed or variable interest rate features. Fixed interest rates are ideal for customers who want stability, as they offer the same amount of interest for the duration of the term. The rate is pre-agreed, but there may be a premium for this security.

The other choice is to have a variable rate bridging loan which can change with the base rate. However, you can save money if the base rate decreases. Borrowers who are less concerned about security sometimes prefer the variable rate option if they believe that the financial markets will travel in their favour. Knowledge and market insight is required here, along with a thorough understanding of personal risk tolerance. If interest rates appear to be rising, most customers will choose the fixed interest rate to lock it in and avoid further increases in the event of a base rate rise.

Bridging loan periods tend to be for several months and there are usually different options for paying the interest portion.

Monthly repayments

The customer repays the interest every month as a separate payment, rather than adding it to the outstanding balance

Rolled-up bridging finance deals

The compound interest is calculated monthly but added to the outstanding loan balance and paid together when repayment is due.

Retained interest

The monthly interest payment due is covered up to a predefined date so that the full sum is only repaid when monies are due.

As well as interest payments, there will be an arrangement fee for the set-up of the bridging loan, which is usually around 1-2%. A repayment fee for exit paperwork may also apply, along with valuation fees for the cost of the surveyor.

Remember, this type of finance is designed to be short-term. As soon as it extends beyond the agreed interim or bridging period, penalties can rapidly stack up. Typically, bridging finance is available for 1 – 18 months.

Yes, there are two broad types: closed bridging finance and open bridging finance.

With closed bridging finance you will tell the lender how you will repay the loan – with what funds and when. These loans usually complete within a few months and the clear exit plan is required as a lending condition.

Open bridge finance won’t usually need this type of exit plan, and it is typically the loan of choice when funds are needed urgently to complete a property transaction. No detailed plan is needed to explain how the debt will be settled, and the finance tends to be offered for up to a year. Of course, it’s important to note that interest will keep being applied throughout this period.

There are also first charge bridging loans and second charge bridging loans.

If you have a loan against a property which is already mortgaged, you’d take out a second charge loan. An example of this would be if you were planning to finance a property extension to improve the property. The categorisation tells the lenders who will have legal priority for repayment if the loan was unable to be paid off at the term-end.

First charge loans apply if the new loan is the first secured on the property.

Bridging loan requirements will depend on the lender. Often, lenders will require that:

Customers must also take out their property mortgage with them too, providing the bridge finance as an interim measure before the standard mortgage comes into play.

Property is put forward as security against the loan. Some lenders expect applicants to have more than one property in order to be eligible for their bridging finance products, but this will depend on the lender and the size of the loan.

Applicants show proof of income – although, interestingly, as loan interest isn’t repaid monthly, some lenders do not request this.

The applicant shows evidence of their property investment track record if they are planning to develop their purchased property.

The applicant can show a business plan if they are using the bridging loan for commercial purposes.

Development loans are another type of short-term property development loan. They are repaid in stages and calculated on the gross value of the development. Personal loans are another option, as are remortgages when timescales are more flexible and a long-term loan is desirable.

Use a bridge loan calculator
Ask for your lender to provide a tailored bridge finance example or illustration around your particular borrowing needs.
Think carefully about the type of bridging loan that you need – whether open bridge finance or closed bridge finance.
Know whether the loan is a first or second charge type.
Clarify whether the interest rate is fixed or variable.
Review products from several lenders.
Be clear on your security.
Read the small print!

Bridging loans are offered by banks, building societies, specialist lenders and brokers. They aren’t widely advertised and usually require a direct application by the customer to find out the product features and offers.

Once you have made an application, a decision will usually be made within 24 hours. The funds then will take around two weeks to be issued, including time for checks to be carried out, the valuation and the actual transfer.

Hank Zarihs are highly experienced and specialist financial intermediaries operating in the property development market. We work with a tried and tested panel of over 60 trusted lenders and can provide excellent bridging finance with attractive features. Contact us to find out more.

Shiraz

Shiraz Khan linkden

Managing Director

Shiraz Khan is the author of the content. Shiraz is the managing director and founder of Hank Zarihs Associates. With over 16 years’ of experience we are master brokers within the short term financing industry. We specialise in a wide variety of short term loans.

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