There are many reasons why someone gets turned down for a traditional loan such as a mortgage or a bank loan. If you have been refused a loan, however, it’s possible you could qualify for bridging finance.
Why people get turned down
Many mortgage lenders have an upper age limit for borrowers and will turn down an application from someone who is over their age limit. A poor credit history will adversely affect your ability to obtain a conventional loan too.
Some buildings are regarded by mortgage lenders as being unfit to live in and they will therefore refuse a mortgage application. If there is no kitchen or bathroom, or the property needs extensive modernization, it may be classed as uninhabitable.
The person applying for a loan may be asset rich but cash poor. They may not have enough income to qualify for a loan but have assets such as property that is valuable. Many lenders judge a loan application solely on the income of the applicant.
Funds may be required urgently, and no conventional lender is prepared to process the application in a rush.
The applicant may only require the money for a few weeks or months, but most banks and mortgage lenders are not interested in lending for short periods and charge large fees for early payment.
Who qualifies for bridging finance?
In the situations listed above, bridging finance can help.
To qualify for bridging finance, you need assets such as property that are used as security for the loan, and an exit strategy, which is when and how the loan will be repaid. These factors take priority over the income level of the borrower or their credit history.
Bridging loans are available for employed and self-employed people. It is even possible for an unemployed person to obtain bridging finance. Age is much less of a barrier too
Bridging loans used while waiting for long-term finance
A bridging loan can be arranged quickly, which makes it ideal to access funds while waiting for more long-term finance to be arranged.
The buyer that cannot get a loan in time to secure a time-sensitive deal could still apply for the loan and also arrange a bridging loan to finance the deal. An example of this is when the completion of a house sale is delayed and this could stop the seller moving to a new home because they need the money from their existing home to buy the new home. A bridging loan can provide the funds to purchase the new home, then repaid after the existing home has been sold.
If a mortgage application has been turned down because the house is unfit to live in, a bridging loan can be used to purchase the home and finance the necessary refurbishment work to make the property inhabitable and eligible for a standard mortgage.
If you have been turned down for a loan, talk to Ascot Mortgages. We will do our utmost to find a bridging finance solution for your finance needs.