The common misconceptions about bridging finance

The common misconceptions about bridging finance

Let us first deal with the widespread misconceptions about
bridging finance:
- It is not a mortgage. Wrong. It is a mortgage.
- It is very fast and simple. Wrong. It is a mortgage.
- It is expensive. Wrong. It is a horrendously expensive mortgage.
No lender will happily advance many thousands of pounds without
security. A loan secured on a property is a mortgage. Bridging
finance is a mortgage. Even if the loan will be needed for a very
short time, the lender will still require a charge on a property so that
they can recover their loan if the borrower defaults.
By definition, therefore, it is not a simple process and, while it is
faster than a traditional mortgage, it is not at all as fast as is
commonly believed. All the normal requirements of a mortgage
are there:
- Proof of ID and address.
- Satisfactory valuation.
- Proof of title.
- Buildings insurance.
- Registration of mortgage deeds.
Having said that, specialist bridging finance companies do tend to
work faster than the banks by, for example, insuring the title to
the property instead of conducting searches through the local
authorities. Such searches can add weeks to the mortgage process.
Again, specialist firms will tend to arrange valuations very quickly
and move the whole process along at a brisker pace than the
banks. While a bank can take up to three or four weeks to
arrange the loan, a bridging finance company could achieve the
same result in, perhaps, seven working days if all the requirements
listed above can be met in that time (claims for a shorter
timescale than this should not be believed). They have, after all, a
powerful incentive to move quickly – their fees.