Bridge lending data suggests the average length of time between initial enquiry through to loan completion of a bridging loan is around 50 days. As a lender, Vitvo receives many calls from borrowers requesting a fast bridge loan and speed of loan completion can be essential for a variety of reasons: a property purchased at auction; a tax bill due; an impending divorce settlement; repayment of an outstanding development loan, to name but a few. Sadly, and frustratingly, necessity doesn’t guarantee the swift execution of a bridging loan.
In order to maximise the chance of achieving a quick turnaround, and seamless execution, the prospective borrower should consider taking the following steps:
1. Get a good idea of the value of the property you wish to borrow against, not the estate agent’s aspirational level, but the price at which it would sell within a 3 month window. Providing a lender with an artificially inflated value merely delays the underwriting process and it can give you unrealistic expectations of how much you can actually borrow. The lender is going to get its own valuation in any case, so it is better to be realistic from the off.
2. Instruct a solicitor who is experienced at completing bridge loans speedily and efficiently on behalf of borrowers. In order to increase the lender’s comfort level with your choice of solicitor, find a firm with at least 3 partners.
3. Find a lender. You face a choice here. Either find a lender directly or find a broker who will find a lender to meet your requirements. You will potentially save around 1-1.5% of your loan notional by going directly to a lender. However, if you are new to bridge loans you may wish to have a helping hand, in which case use a broker. A good start, irrespective of whether you intend to go direct or via a broker, is to do a Google search for “Fast Bridge Loans”. You will find details of lenders and brokers specialising in facilitating fast bridging loans. A high street bank lender is best avoided due to their slower processes, if speed is indeed important to you.
4. Ensure the lender will run the valuation process and the legal process at the same time. Many lenders only do this as a sequential process; this only slows down the whole process. Just be aware if the valuation comes in lower than you expect, you may not be able to borrow quite as much as you had hoped. This isn’t necessarily a problem unless you are trying to borrow the maximum amount that a lender will lend you against a given property.
5. Provide all the Information requested when filling in the application form; providing it in piecemeal fashion just causes unnecessary delays.
6. After the bridge lender completes their due diligence on receipt of your application form, transfer the lender’s legal fees to your chosen solicitor so they can provide a fees undertaking to the lender solicitor. The lender’s solicitor will usually only provide legal documents to your solicitor and conclude all the legal due diligence required to complete your bridge loan if such an undertaking is given.
7. The lender will appoint a RICs valuer to value the property offered as loan security. You will be contacted directly by the valuer, who will agree with you a date and time to visit and assess the property. The valuer will expect payment from you in advance of this visit and this is usually required to secure the property visit at all.
8. Once your solicitor has received your completed loan documentation and the lender has received a satisfactory valuation, the loan should be able to complete within a couple of days. Always stay on top of your solicitor, and make yourself available promptly to physically go into the solicitor’s office to sign all the loan documentation.
Fast bridging loan execution doesn’t happen without preparation, realism, prompt responses and the choice of the right lender.