Bridging loans are designed to provide the borrower with short-term property finance more quickly than traditional mortgages, which is why they are frequently used for scenarios such as auction purchases, chain breaks, meeting refinance deadlines and time-sensitive property opportunities. However, each bridging loan brings a unique set of circumstances and therefore there isn’t a single answer to how quickly you can get a bridging loan.
In straightforward bridging loan cases such as a residential chain-break on an unencumbered property, finance can sometimes be arranged within a relatively short time frame – sometimes within a few days. More complex transactions or property types usually take longer. How quickly the bridging loan can actually complete depends on several factors including the property type, lender underwriting requirements, valuer availability, legal due diligence, the quality of information provided and the strength or complexity of the proposed exit strategy.
Rather than borrowers focussing on headline speed claims, we often find it is more important to understand what actually drives bridging finance timescales instead.
How Long Does a Bridging Loan Usually Take?
The time required to arrange a bridging loan through to completion varies from case to case. While bridging loan lenders can often assess a transaction and issue indicative terms relatively quickly (usually within 1-2 days), full completion to the point of funds being transferred takes longer because several separate workstreams need to be completed.
Lender’s usually need to undertake underwriting, commission a valuation, assess the security property, review the proposed exit strategy and complete legal due diligence before releasing funds. In most transactions, these workstreams run concurrently alongside each other rather than sequentially, helping to reduce the overall timescale.
The complexity of the transaction, however, is often the biggest factor for how long the bridging loan will take to complete. A straightforward residential property with a clean title and a simple exit (for example the property sale that has exchanged and is awaiting completion) will generally progress more smoothly than a commercial asset, mixed-use property or project involving significant refurbishment works which requires additional assessment.
Bridging Loan Indicative Terms vs Completion
It is also important to distinguish between receiving initial indicative loan terms and completing the facility itself. Indicative terms can often be obtained relatively early in the process, sometimes as quickly as the same day, whereas completion requires valuation, legal work and formal lender approval before funds can be released.
The indicative terms are useful because they provide an initial indication of lender appetite, possible loan amount, interest rate pricing and the broad structure of the loan. These terms allow a borrower to understand, at a high level, whether a lender is likely to support the transaction and on what basis.
It is important to state, however, that obtaining indicative terms is not the same as receiving formal approval. Before completion can take place and funds can be released, the lender will usually need to review the borrower’s situation in greater detail, assess the property, consider the valuation or survey, understand the legal position and confirm the viability of the proposed exit strategy.
Where borrowers are working to tight deadlines it is particularly important to understand the difference between receiving terms and completion of the loan as completion remains subject to the lender’s underwriting and due diligence requirements being satisfied.
What Can Speed Up a Bridging Loan?
The fastest bridging loan transactions we see are usually the ones that have the best preparation and clearest proposal. When a clear proposal is provided and it is supported by robust and organised information at the outset, lenders can review the case more efficiently and therefore usually move faster. Where the purpose of the loan can be clearly explained, full details of the property can be provided, and the exit strategy is credible and well-evidenced the borrower will usually be in a stronger position than someone who might still be collating details after their application.
Having key documentation prepared in advance can also speed up a bridging loan completion. Borrower identification, bank statements, proof of income documentation, property information, solicitor details and evidence supporting the proposed exit strategy are all required at application or during underwriting. We typically see delays during the loan process when information arrives piecemeal or requires clarification.
From a practical perspective, arranging access for the valuation quickly is also a significant consideration for the transaction speed, as is instructing an experienced solicitor without delay. Wherever possible borrowers should try to identify any known title issues or property issues before making an application, which can help to avoid unnecessary delays later in the process.
Finally, bridging loan lender selection can be a factor in the overall timescales. A lender with a strong appetite for a transaction may progress more efficiently than one that is uncertain about the property, exit route or borrower profile.
What Can Delay Bridging Finance?
Despite a lender’s advertised speed, a bridging loan transaction may be delayed for reasons outside of a lender’s control. Delays in valuation access is a common example as a supporting valuation is required before a bridging loan lender will proceed with the transaction. If a surveyor is unable to inspect the property, or if additional specialist reports are required, completion of the loan can take longer than expected.
Where legal issues are uncovered these too can have a significant impact on the overall timeframes, particularly where these involve title defects, ownership complexities, leasehold concerns or planning matters that need to be reviewed or resolved before completion.
An unclear proposed exit strategy, or one which isn’t well-evidenced, can generate queries from underwriters, as too does incomplete or inaccurate borrower information which can lead to repeated requests for clarification or further documentation to be provided.
The complexity of the asset or project may also cause potential for delay, despite this being known at the point of application. For example, commercial property, mixed-use assets and specialist security types may require more extensive assessment than a standard residential property, particularly where legal, title or lease matters come up during the due diligence process. Where projects require substantial refurbishment works, these too may require additional consideration, particularly where build costs, schedules of works or future values need to be fully assessed.
Finally, changes following application can cause delays, for example where there is a change to the loan amount, security property or exit strategy, because key parts of the transaction may need to be reassessed.
Fast Bridging Loans for Auction Purchases
Auction purchases are one of the most common uses of bridging finance because successful bidders typically work to strict completion deadlines and bridging loans can provide a practical funding solution where a traditional mortgage is unlikely to be arranged within the required time frames. The most successful auction finance transactions, however, usually commence before the auction itself.
Although it might result in some abortive work for the borrower, having an understanding of lender appetite, likely borrowing levels, valuation requirements and exit options before bidding at auction can make the post-auction process significantly more efficient. Many bridging lenders supporting auction purchases will also issue conditional loan offers, undertake pre-auction valuation inspections and perform initial legal due diligence on the purchase because they understand that once a buyer is successful at auction, they are usually contractually committed to the purchase.
Borrowers who seek advice with plenty of time before an auction are often better positioned, and confident going into the auction, than those who only begin exploring their funding after contracts have been exchanged. While final lending approval remains subject to underwriting and full due diligence, preparation before the auction can improve certainty and reduce avoidable delays.
Bridging Finance for Time-Sensitive Property Transactions
Although auction purchases are a common use of bridging finance as outlined above, there are several other scenarios where transaction speed matters.
Bridging loans are regularly used by borrowers to resolve residential chain breaks, provide short-term funding while a longer-term mortgage is being arranged, or to support property acquisitions where timing is critical such as a securing off-market or below market value deals. Bridging loans can also be used where a property is not currently suitable for mainstream mortgage lending (uninhabitable property).
Investors using bridge-to-let finance, for example, may purchase (and sometimes refurbish) a property using a bridging loan before refinancing onto a buy-to-let mortgage. Others use unmortgageable property finance to acquire assets that require improvement before lenders will provide longer term mortgage finance.
Bridging loans are also commonly used for refurbishment projects through bridging finance for refurbishment, as well as for developers requiring development exit finance once the scheme is complete while they await property sales or refinancing.
Bridging Loan Calculator
Borrowers comparing different loan amounts, terms and interest structures may also find our bridging loan calculator useful as an initial guide when assessing their projects and potential funding options.
How a Bridging Finance Broker Can Help
Whilst a specialist bridging loan broker can’t eliminate every possible delay, they can help borrowers navigate the process more effectively. One of the primary benefits of broker involvement is the lender selection as different lenders have different appetites for property types, exit strategies and borrower profiles and by identifying a lender that is well-suited to the transaction from the outset can prevent significant time being lost pursuing unsuitable options.
A broker can also help the borrower to present the transaction clearly, ensure any key information is available early and help to identify potential issues before they cause delays later in the process which can improve underwriting efficiency and reduce the likelihood of repeated information requests. Where something unexpected does come up, good bridging loan brokers can also support the borrower and lender to get the issues resolved quickly.
Most importantly, experienced brokers understand what lenders are looking for and can help to respond to lender requirements as well as keeping the proposed exit strategy at the centre of the application, as it is often one of the most important aspects of any bridging loan and the borrower’s ability to repay it.
Speak to Adler Green About Bridging Finance
Adler Green helps property investors, developers and borrowers assess bridging finance options for time-sensitive property transactions. If you are working to a deadline, we can help you understand the likely lender options, timescales and information required before you proceed. Contact us today to discuss your bridging loan options.
Frequently Asked Questions About Fast Bridging Loans
Can a bridging loan complete in a week?
In exceptional circumstances, a bridging loan may complete within a very short time frame. However, borrowers should not assume this will always be possible. Completion depends on valuation requirements, legal work, lender underwriting and the readiness of all parties involved.
How quickly can I get bridging loan terms?
Indicative terms can often be obtained more quickly than full completion, particularly when clear information about the borrower, property, loan requirement and exit strategy is available from the outset.
What documents are needed for a bridging loan?
Requirements vary by lender, but commonly requested information includes identification, proof of address, property details, the loan purpose, exit strategy, solicitor details, valuation access arrangements and supporting financial or property documentation.
Do bridging loans take longer for commercial property?
They can. Commercial bridging loans, mixed-use properties and specialist assets often require more extensive valuation and due diligence, which may extend the overall process compared with a straightforward residential transaction.
Can auction finance be arranged before the auction?
Before an auction, borrowers can often discuss lender options, likely borrowing levels and funding structures before bidding. However, formal lending remains subject to underwriting, valuation and legal due diligence once a purchase is agreed.
