Bridging Loan Eligibility Checker
Use our bridging loan eligibility checker to find out if you’re likely to be accepted for a bridging loan based on your loan-to-value:
Key Takeaways
- Loan-to-Value (LTV) is crucial: Bridging loan eligibility primarily depends on your LTV ratio. Generally, lenders cap the LTV at 80%, meaning you can borrow up to 80% of the property’s value. The remaining 20% must be covered by your own capital or equity in property.
- Solid Exit Strategy Required: Bridging loan providers want assurance that you can repay the loan, typically through a solid exit strategy, such as securing a mortgage or selling a property.
- Property Valuation Matters: A lower-than-expected property valuation can reduce your chances of approval, as it impacts your LTV ratio.
- Bridging Loan Calculator: Using a bridging loan calculator is the best way to determine your eligibility and understand the potential costs.
What is Bridging Loan Eligibility?
When considering a bridging loan, one of the first questions that comes to mind is: Am I eligible for a bridging loan? Bridging loans are a valuable financial tool for those looking to purchase a property quickly, but like any form of financing, eligibility depends on several key factors.
At Bridging Finance, we offer expert guidance and support throughout your bridging loan journey, helping you navigate the complex eligibility criteria. While many factors come into play, the most important ones are your Loan-to-Value (LTV) ratio and your exit strategy.
How Loan-to-Value (LTV) Affects Bridging Loan Eligibility
LTV is perhaps the most significant factor in determining your eligibility for a bridging loan. It refers to the amount of money you need to borrow compared to the value of the property (or properties) you are using as security.
Generally, bridging finance lenders will allow you to borrow up to 80% of the property’s value, although this can vary depending on the lender and your specific situation.
The Importance of a Solid Exit Strategy
While LTV is a crucial eligibility factor, a solid exit strategy is essential for securing a bridging loan. Unlike traditional mortgages, bridging loans are short-term financing options that are repaid either through the sale of a property or refinancing. Lenders want to see a clear path for repayment, as the loan is typically for a 12-month term, but this can vary depending on the situation.
If you’re planning to repay your bridging loan by securing a mortgage, lenders may request an Agreement in Principle (AIP) from your mortgage lender. This AIP will confirm your ability to obtain a mortgage and help reassure the bridging lender that you will be able to exit the loan without issues.
Common Exit Strategies for Bridging Loans:
- Property Sale: Selling an existing property or the property purchased with the bridging loan.
- Securing a Mortgage: Refinancing your bridging loan into a longer-term mortgage.
- Sale of Another Asset: You may also use the sale of another property or asset to repay the loan.
Having a clear, executable exit strategy is often the deciding factor in securing bridging finance, so it’s critical to have one in place before you apply.
The Role of Property Valuations in Bridging Loan Eligibility
When applying for a bridging loan, property valuations are a key consideration. The value placed on the property you intend to use as collateral will directly influence your Loan-to-Value ratio. If the property is valued lower than you expected, it will reduce the LTV ratio and may affect your eligibility for the loan.
Why Are Valuations Important?
Bridging loan lenders typically appoint a surveyor to value the property before proceeding with the loan. The valuation determines how much the lender is willing to offer as a percentage of the property’s value. If the valuation is lower than anticipated, it could lead to a higher LTV ratio, which can decrease your chances of approval.
To avoid any surprises, it’s wise to work with a trusted property expert to get an accurate estimate of the property’s value before applying for a bridging loan.
Understanding Bridging Loan Eligibility: A Step-by-Step Process
If you are wondering whether you are eligible for a bridging loan, the easiest and most reliable way to check is by using a bridging loan calculator. This tool helps you assess your eligibility by calculating the Loan-to-Value ratio based on the properties involved in the transaction.
How a Bridging Loan Calculator Can Help
Our free bridging loan calculator can give you a clear picture of what you can borrow, what your LTV will be, and the potential interest rates based on your property’s value. It’s an essential first step for anyone considering bridging finance, as it allows you to assess your options and plan accordingly.
Why Work with a Bridging Loan Broker?
Navigating the complex world of bridging finance can be challenging, which is why many people turn to a bridging loan broker. At Bridging Finance, we specialise in helping you find the best bridging loan options, guiding you through every step of the process.
The Benefits of Using a Bridging Loan Broker:
- Expert Advice: We’ll provide you with honest, tailored advice to help you make an informed decision.
- Access to a Wide Range of Lenders: We have access to a variety of lenders, increasing your chances of finding a competitive deal.
- No Fees for Our Services: We work with lenders to ensure you get the best possible rates without paying additional broker fees.
- A Smooth Application Process: We handle all the paperwork and liaise with lenders to ensure a smooth process from start to finish.