Bad credit and bridging loans

Bridging loans are a desirable financial solution under many scenarios. Because of this, even people with bad credit may want to make use of a bridging loan.

Can I get a bridging loan with bad credit?

Yes/possibly – There may be times when you are unable to keep up with your financial responsibilities. You may be unable to make payments on loans and other debts for many reasons. You may have become ill or lost your job; not paying is not always intentional.

Whatever the circumstances, if you have had problems in the past, it can affect your credit history. If you have bad credit or poor credit history, it doesn’t necessarily mean you will be turned down for a bridging loan. It may be more challenging to get approval for some types of credit, but others may be possible.

Check your credit report

Make sure you actually have bad or poor credit – sometimes people miss a payment or two and assume they have poor credit this isn’t always the case. FriendsCapital has partnered up with UK Credit Ratings, check your credit report here.

What is a bridging loan?

A bridging loan is, as the name suggests, is a type of finance that bridges the gap. It is typically a finance option when buying a house. If you haven’t sold your home but want to complete on a new one, a bridging loan is an answer.

Read more on Bridging Finance here 

These types of short-term loans can be useful if you want to renovate your house before selling it. You may also want to have a bridging loan in place if you are buying property at auction. It is usually a short-term loan of 12 months or less. A bridging loan is paid off when you sell your house. When you take out this type of loan, it will need security, usually a property.

Applying for a bridging loan with bad credit

Even if you have bad credit, you can still get the loans you need. Many lenders are willing to work with you so you can find the right finance solution. Applying for a bad or poor credit bridging loan will require a specialist lender. An expert advisor will be able to look at suitable loan companies for you.

When applying for the bridging loan, you should:

  • Be honest about any issues with your past credit 
  • Provide all the necessary documentation
  • Have property for security

The financial expert will be able to explain all of the documents you will need to complete an application. Having an honest discussion about your previous credit problems is vital. It allows the advisor to choose the right financial lender. They will know which lenders specialise in providing financial products to people with bad credit.

You will have to think about when and how the loan is going to be repaid. If you are using your current house to satisfy the credit, then selling it at the right price will ensure a quicker sale. The bridging loan is either a closed or open loan. A closed bridging loan has a set completion date. An open-bridge loan won’t have a set date for you to pay it off. How you intend to complete the loan requirements will dictate the type of loan you get.

A bridging loan company may consider other assets if you have them. You may be able to use business equipment or items of high value. The advisor will be able to discuss any options for securing the loan with you.

Why a bridging loan is possible with bad credit

When you take a mortgage or other types of credit, your credit history is a vital source of information. The financial institution uses your credit history as an indication of possible payment issues. A mortgage lender needs to know you will pay for the whole term of the mortgage agreement. A bad credit report may give them cause for concern, and you may not get a mortgage.

A bridging loan focuses on the value of the security you are using. The bridging loan application process involves getting a valuation for the security property. As long as your property is valuable enough to cover the loan you are applying for, a lender may give you a bridging loan.

Because bridging loans are this way, the company tends to look more at the value of the property than the credit history. Some big banks or financial companies may not want to risk this type of loan if you have bad credit. It is essential to find the right company, and a financial expert will be able to do this.

Apply Now

If you think a bridging loan is what you need, we can help. We work with many different lenders and can find the right one for you. Specialist loan companies and banks will offer people with bad credit a loan. If you want to apply for a bad credit bridging loan, talk to Friends Capital today.