In today’s tough economy, it is no surprise that many people have credit problems. Having a poor credit history can make it difficult for individuals to obtain financing such as mortgages, credit cards, and personal bank loans. Credit ratings are one of the main points that banks and lenders evaluate when deciding to extend financing.
Even if current credit issues have been cleared, a past poor credit history can come back to haunt those looking to financial support – bridging loans, however, are a popular way for persons with bad credit to obtain the funding they need.
What is a Bridging Loan?
A bridging loan is a short term loan that can offer a solution to financial issues. Although raising money is this manner is generally very quick, many lenders will expect repayment of this type of loan within 12 months of the funds being distributed. There are options to extend the repayment period given the applicant chooses a loan that does not have a set repayment date or plan.
How Can Those with Bad Credit Obtain Bridging Finance?
When considering a bridging loan to help solve financial difficulties, it is important to seek the advice of a knowledgeable finance broker. EuroGuide’s dedicated team is available to answer any and all questions regarding bridging loans and can help to decide if this type of financing is right for you.
Our advisors will explain the bridging loan process in plain English and help to explain how any credit issues may affect the loan application. Depending on your unique credit situations, there may be different options available for bridging loans, such as a non-status bridging loan.
If a credit history includes mortgage arrears or CCJs, an individual may qualify for a non-status bridging loan given they meet the minimum requirements. This type of loan can be provided regardless of credit history or income status – essentially, past credit issues are disregarded. In order to qualify for this type of financial support, one must meet the requirements for security and have a credible exit strategy for the loan.
Security in the United Kingdom usually takes the form of owned property, although some lenders may also consider other assets.
An exit strategy is a timeline or plan for paying back the loan. For example, if an individual is interested in purchasing a home while selling their current home, they may use bridging finance. In this case, the sale of the home and subsequent repayment of the loan would be their exit strategy.
Although this is a common exit strategy for many borrowers, it is important to take a close look at the current housing market in the United Kingdom – this industry is going through a difficult period, making lenders more hesitant to extend funding for individuals who wish to use it for home purchase or sale.
Benefits of Using Bridging Finance
There are many benefits that come with choosing a bridging finance loan. First, those with poor credit are able to secure financing quickly without their credit history barring them from receiving funding. These loans are also easy to apply for and can be used for a variety of purposes.
Although this may make bridging loans seem like the perfect solution, it is important to also consider the costs associated with this kind of funding. EuroGuide’s advisors can help walk you through different options and ensure the financing you receive is the right choice for your unique situation and budget needs.
