Bridging loans have become an increasingly popular financial solution for those needing quick access to funds, particularly in property transactions.
One of the most attractive features of bridging finance is its speed – but just how quickly can you get a bridging loan?
This guide will explore the timelines involved in securing a bridging loan, factors that influence the speed of approval, and practical steps you can take to expedite the process.
Typical Timelines for Bridging Loans
Unlike traditional mortgages that can take months to arrange, bridging loans are designed for rapid deployment of funds.
Typically, you can expect to have a bridging loan approved and funded within 3 to 14 days from your initial application.
In some exceptional cases, where all the stars align – meaning you have all documentation ready, the property valuation is straightforward, and you’re working with a lender known for quick turnarounds – it’s possible to secure a bridging loan in as little as 24 to 48 hours.
However, it’s important to note that these ultra-fast completions are the exception rather than the rule.
To put this into perspective, a traditional mortgage usually takes between 6 to 8 weeks to complete, and in some cases, it can stretch to 3 months or more.
This stark difference in timelines is one of the key reasons why bridging loans are often the go-to option for time-sensitive property transactions or when speed is a critical factor.
What affects the approval time?
While fast bridging loans are known for their quick turnaround times, several factors can influence how fast you can get your loan approved and funded.
Understanding these elements can help you set realistic expectations and potentially speed up the process.
The loan amount and complexity play a significant role.
Smaller, straightforward loans often move through the system more quickly than larger, more complex arrangements. The type and condition of the property being used as security also matter.
Standard residential properties in good condition typically require less scrutiny than commercial properties or those needing significant renovation.
Your financial situation and credit history will be considered, although bridging lenders do place more emphasis on the property’s value and your exit strategy than on your personal financial history.
That said, a clean credit history can help smooth the process. Using a non-status lender can often save 24 hours, as there’s no income or credit assessment needed.
The quality and completeness of your application is important. Applications with all necessary documentation provided upfront tend to progress much faster than those requiring back-and-forth communications for additional information.
Each lender has its own internal processes, which can affect approval speed. Some lenders specialise in rapid bridging loans and have streamlined systems in place to facilitate quick decisions and funding.
The valuation process can significantly impact timelines.
A desktop valuation, where the lender assesses the property’s value based on available data without a physical inspection, is very quick. An AVM valuation is even quicker! However, for higher-value properties or those in poor condition, a full physical valuation may be required, which can add time to the process.
Finally, the legal work and conveyancing process can affect the overall timeline. Using a solicitor experienced in bridging transactions can help keep this aspect moving swiftly.
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The Bridging Loan Application Process: Step-by-Step
The process typically begins with an initial enquiry and assessment.
You’ll discuss your requirements with a specialist bridging broker, who will evaluate your needs and advise on suitable options. This stage can often be completed in a matter of hours.
If your application looks promising, you’ll receive an Agreement in Principle (AIP). This document outlines the basic terms of the loan the lender is willing to offer, subject to further checks.
An AIP can usually be provided within 24 hours of your initial enquiry.
The next step is submitting a full application.
This involves providing detailed information about yourself, the property, and your exit strategy, along with supporting documentation. The more prepared you are at this stage, the faster your application can progress.
Once your application is submitted, the lender will arrange a valuation of the property. As mentioned earlier, this might be a desktop valuation or a physical inspection, depending on the property and loan circumstances.
Simultaneously, the lender will conduct underwriting and financial checks. It’s not always necessary for full credit checks to be done. They’ll scrutinise the details of your application, assess the risks, and may come back with queries or requests for additional information.
Legal work and searches form a part of the process. Your solicitor will conduct necessary legal checks and searches on the property, while the lender’s solicitors will prepare the loan documentation.
The final stage is approval and fund release.
Once all checks are complete and the lender is satisfied, they’ll issue a formal loan offer. Upon acceptance and completion of legal work, the funds will be released.
While this process can move quickly, it’s important to note that delays at any stage can impact the overall timeline. Being prepared and responsive throughout can help keep things moving smoothly.
explore bridging loansHow to Speed Up Your Application
If you’re looking to secure a bridging loan as quickly as possible, there are several steps you can take to expedite the process.
Working with an experienced broker can be invaluable. They have in-depth knowledge of the market and can quickly identify lenders most likely to approve your application swiftly.
Choosing a lender known for quick turnarounds can significantly impact your timeline. Some lenders specialise in rapid bridging finance and have systems in place to facilitate fast approvals and funding. While high street banks may offer bridging loans, they rarely match the specialists for speed.
One of the most effective ways to speed up your application is to have all necessary documentation prepared in advance. This includes proof of ID, details of the property you’re using as security, evidence of your exit strategy, and any other relevant financial information.
Being able to provide this information quickly when requested can shave days off the process.
Opting for a desktop valuation, where possible, can also save time. While this isn’t always feasible, particularly for high-value or unusual properties, it can significantly speed up the valuation process when it is an option.
Often this can be down to loan to value. If you want a 75% LTV bridging loan, or lower, a desktop valuation may suffice. Whereas a 100% LTV bridging loan, that is secured across two properties, may require a physical inspection due to the increased lending risk.
Using a solicitor who is experienced in bridging transactions is important. They’ll understand the urgency often associated with bridging finance and will be familiar with the legal requirements, helping to avoid delays in the legal process.
Related reading: Do I Need a Solicitor for a Bridging Loan?
Have a low LTV
For a lender, the LTV percentage is an indication of risk. A 90% LTV loan is more risky than a 75% LTV loan.
So at 75% lenders are more comfortable about risk and the terms they might offer you.
At 70% or below we have lenders that will use Automated Valuation Model (AVM) to establish the property value.
AVMs can greatly speed up the processing of loan applications. We have lenders that receive their AVM results so quickly, that a case can move to the legal stage on the same day it is received.
Types of Bridging Loans and Their Impact on Speed
The type of bridging loan you’re applying for can influence how quickly you can secure the funds.
First charge bridging loans, where the bridging lender has first call on the property if you default, are often quicker to arrange than second charge loans, which sit behind an existing mortgage.
Regulated bridging loans, used for owner-occupied properties, may take slightly longer to process due to additional consumer protection requirements. Unregulated bridging loans, typically used for investment properties, can often be arranged more quickly.
The distinction between residential and commercial bridging loans can also affect timelines. Residential bridging loans are often faster to arrange due to more standardised processes and valuations. Commercial bridging loans may require more detailed assessment, potentially extending the timeline.
Related reading: First, Second & Specialist Charges in Bridging Finance
Potential Delays and How to Avoid Them
While bridging loans are designed for speed, various factors can cause delays in the process.
Common reasons include incomplete applications, issues discovered during property valuations, and complications in the legal process.
To avoid these potential setbacks, ensure your application is complete and accurate from the outset.
Be prepared to provide additional information or documentation quickly if requested. If you’re aware of any potential issues with the property, such as structural problems or title complications, disclose these upfront. It’s better to address potential problems early rather than have them cause delays later in the process.
Choosing a property in good condition and with a clear title can help avoid valuation and legal delays. If you’re considering a property that might be viewed as higher risk, such as one requiring significant renovation, be prepared for a potentially longer process.
Balancing Speed with Other Important Factors
While the speed of obtaining a bridging loan is often a primary concern, it’s important to balance this with other important factors.
Interest rates and fees can vary significantly between lenders, and the fastest option isn’t always the most cost-effective. Take the time to understand the total cost of the loan, including any arrangement fees, exit fees, and the monthly interest rate.
Loan terms and conditions are equally important. Pay attention to the loan term, repayment conditions, and any penalties for early repayment. Ensure that the terms align with your needs and your exit strategy.
Speaking of exit strategies, this is the most important aspect of any bridging loan.
Lenders will want to see a clear and viable plan for how you intend to repay the loan at the end of the term. Whether you’re planning to sell the property, refinance to a traditional mortgage, or have another repayment method in mind, make sure your strategy is solid and well-documented.
Remember, while speed is often needed in bridging finance, it’s equally important to ensure you’re choosing the right loan for your circumstances, not just the fastest option available.
Bridging loans offer a remarkably quick route to securing property finance, with typical timelines ranging from 3 to 10 days, and even faster in some cases.
The speed of arranging a bridging loan depends on various factors, including the loan amount, property type, and the efficiency of all parties involved in the process.
By understanding these factors and taking proactive steps – such as working with experienced professionals, preparing documentation in advance, and being responsive throughout the process – you can maximise your chances of a swift and smooth bridging loan experience.
Need some help?
If you need a short-term bridging loan then a specialist broker is a good place to start. You will get expert help and advice along with a wide range of lenders to choose from.
To get matched with a specialist broker, please call us on 0330 030 5050.
