There are all kinds of reasons why mortgage applications get delayed. Bridging loans can be arranged quickly and are useful to complete purchases while waiting for mortgage funds to become available.
New rules for buy-to-let landlords who have a property portfolio, where they have four or more properties with mortgages, mean that it is taking longer to process commercial mortgage applications. Landlords must provide a lot of documents and paperwork with detailed business plans that provides evidence of current income sources and projected future income. This has increased the workload for borrowers, lenders, and mortgage brokers.
The extra time taken to check documents can delay the application and the point at which funds are available. If a property purchase is time sensitive, landlords can use a bridging loan to complete a purchase until a commercial buy-to-let mortgage application has been completed.
Farmers have reported that mortgage lenders are performing more rigorous checks and searches when dealing with loan applications to purchase land. Farmers have also experienced delays with the solicitors dealing with the legal work. Delays of up to 12 weeks have occurred on land deals.
A cash sale for land can be completed within a fortnight. If sellers are put off non-cash buyers because of expected delays, the purchasing farmer can use a bridging loan to quickly complete the purchase, then repay it after the mortgage funds are available.
People purchasing a new home can often be faced with mortgage delays, and there are several stages in the mortgage application process where delays can occur.
Applicants need to provide proof of identity and their financial status. As banks have suffered from increased identity fraud, they have become more vigilant when checking documents to make sure that the borrower is who he or she says they are, and that evidence of their finances is genuine. The document checking process therefore takes longer than it used to.
Many people no longer receive paper bank statements or utility bills, and must take extra time to have paper copies posted to them.
Another key area where delays happen is in the conveyancing process. There will be legal work that needs doing by the borrower’s solicitor as well as the lender’s solicitor. Delays can happen from either.
The property being purchased requires a valuation report, and this too can get delayed if the valuer has a high workload.
The value of bridging loans
No matter what the reason for a mortgage delay, a bridging loan can be used to complete a purchase. As long as the property used as security is a high enough value to cover the loan, and the borrower knows the approximate time when they can repay the loan, a bridging finance application has a good chance of being approved.
If you are experiencing mortgage delays, talk to Ascot Mortgages who can find a suitable bridging finance lender to provide a short-term bridging loan and allow you to quickly complete a property deal.