LENDING CRITERIA all bridging loans

LENDING CRITERIA all bridging loans

As with mortgages there are standard criteria that apply to
virtually all bridging loans.
Maximum loan

Given these indecent profit margins, you might expect lenders to
be generous with their loan-to-value criteria. Not so. The
maximum loan you can expect is 70%. This is belt and braces for
the lender. If you fail to redeem the loan the property will be sold
with the absolute certainty that the lender will recover the debt,
and all related expenses, in full.
The term

A typical term is 12 months, with the loan to be repaid in full at
the end. Normally there will be the right to redeem the loan
earlier, but watch out for the minimum term requirement. Many
bridging loan companies insist that you keep the loan for a certain
period, typically three months (see above). This insures a
guaranteed overall profit on each transaction. You can’t redeem
the loan even if you are able to do so!
Non-status
Unlike mortgages, most bridging loans are not based on your
ability to repay the loan. They are, in the jargon, ‘non-status
loans’. Income, therefore, is not a factor in deciding whether you
should get a bridging loan or not. At the same time, confusingly,
application forms for such loans do ask about employment details
and income. It is important at the outset to establish that your
loan will indeed be non-status unless, of course, you have
sufficient income to service the loan, together with you current
mortgage and all other liabilities!