Six Reasons Why A Bridging Loan May Not Complete!

Will Your Bridging Loan Application Be Successful!

Some deals or circumstances cannot be funded for a variety of reasons. Many can be turned down or fall at the first hurdle i.e. even before the bridging loan application process starts!

Here is our top 6 list of reasons why bridging loan applications, in no particular order, fail!:-

• The borrower selects a bridging lenders product on price alone without understanding the different criteria providers use.
• The applicant has unrealistic expectations on available loan to values. Bridging and mortgage lenders offer finance against a percentage of property value and ignore profit expectations expressed in cash terms.
• The surveyor instructed by the lender reports a lower property valuation than the customer expects. The customer doesn't have the cash to make up the difference.
  
  • Applying to a short term lender that funds against "90 day forced sale value" rather than a "full open market value" lender is a mistake when trying to raise anywhere near the maximum offered.
• The bridging lender isn't convinced that the applicants exit strategy will result in their loan being repaid -
  
  • either in the intended timeframe!
  • Or that the loan will be repaid in full!
• In poor property market conditions the borrower will need to demonstrate that monthly interest payments can be met should the contract term be exceeded.
• The applicant fails to disclose all relevant information. For example, poor credit history does not need to be a barrier to a successful bridging loan application. However failure to disclose could lose the lenders confidence and result in a refusal!

Using a bridging loan broker can significantly improve your chances of success because all the potential pitfalls should be minimised by targeting the right lender.

Submitted by Bridging Loan Broker on Sun, 17/01/2010 - 13:08

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