As with all forms of finance, every lender needs to know that they are taking an assessed risk. Non status bridging loans are used by developers and investors who need access to fast, flexible funding but cannot provide cash flow analysis or status assessments to secure the credit.
Fast Non-status bridging loans allow property investors and developers the opportunity to obtain funding without reference to their personal finances or credit history. Instead, the criteria for lending is focused on the asset the finance is secured upon.
If a prospective borrower has a less than immaculate credit score or lacks sufficient collateral in order to secure traditional bridging finance, then most lenders will not agree to a loan. A non status bridging loan, however, requires a different set of requirements and can be agreed, providing the lender recognises the promise and potential of the proposed project.
Never ones to be risk adverse, our brokers at Bridging Options pride themselves on being able to tailor make bridging loans across a range of clients and situations. If you are interested in a non status bridging loan, then contact us today or find out more by reading below.
What is a non-status bridging loan?
If time is of the essence, then a short-term bridging loan is a good way to secure an asset before long term funding can be put in place. They allow property investors and developers the opportunity to bag a bargain at the last minute and even provide funding in order to do it up and sell it on – often at a profit.
Although bridging loans are quicker to obtain than traditional forms of finance, most lenders will require certain checks to be completed beforehand, such as affordability assessments and previous property development history.
This can be a stumbling block for some who are just starting out in the industry or developers who have irregular income from their property portfolios but want to expand with new investments.
Most lenders recognise that a “one size fits all” approach can be limiting and will offer non status bridging loans to projects that show promising potential. At Bridging Options, we prefer to look at all applications based on the strength of the asset rather than the financial status of the client.
Differences between status and non-status bridging loans
It is important to note that all types of commercial bridge finance are unregulated in the UK but when it comes to non status bridging loans, they also come with additional implications such as:
- Higher rates of interest – it stands to reason that the lower the interest rate the better the loan guarantees. As non status bridge finance comes with an increased risk to the lender, they compensate by imposing higher rates of interest. Overall, however, the opportunity that the loan presents to the borrower is often worth more than the additional cost.
- Lower Loan to Value ratio (LTV) – the amount available to borrow tends to be lower in order to give the lender greater reassurance that their loan with be recouped, in the event that can’t be repaid.
That said, in the right circumstances there are a number of benefits that taking a non status bridge loan can bring. Such as:
- Faster approval process – with less searches and assessments to complete, non status bridge finance can be approved almost instantly.
- Consideration of soft assets – most bridge loans are secured using property or land, however, for a non status bridge loan other assets such as pensions, and investment portfolios are often used as collateral (at the lenders discretion).
Why you might take out non-status bridging finance
The Financial Conduct Authority (FCA) have a set of financial status regulations which borrowers need to comply with in order to be approved for bridging finance. Whilst this ensures that loans are approved with reasonable expectation of the repayment, the emphasis placed on cashflow and income is often not a true reflection of modern lending.
Many investors who are asset rich, don’t tend to have a substantial pot of cash, as they are constantly using it to reinvest and will forego capital in place of portfolio development. If you are a new developer without an established track record, or have an adverse credit history, you may also struggle to meet the requirements of the FCA.
This is where a non status bridge loan can assist and are often required by developers who want to:
- Purchase property, land or new premises
- Release equity from their current portfolio for business growth
- Undertake light redevelopment work or make changes to their investment properties
- Convert single dwellings into HMO’s
- Refinance an existing residential property
- Pay HMRC tax bills or consolidate business debts
How do I apply for a fast non-status bridging loan?
The best way to apply for a non status bridge loan is through a specialist company such as Bridging Options. By using independent brokers we can source the best rates for our customers and tailor them to their specific circumstances.
The application process is quick and easy to do, and our bridging loan experts are always on hand to answer any questions or queries you may have.
What information will I need to supply?
The information requested will entirely depend on how and what you intend to use the non status bridge loan for. All clients, however, are required to secure the loan against an asset(s), this is usually (but not exclusively) in the form of property.
At Bridging Options, we will not look at your previous credit performance; instead we will ask you to guarantee the loan against an already owned property or the property in which the loan is intended for. Depending on the amount and conditions that apply, we may require a business plan and will need to agree upon an exit strategy.
Failure to repay the non status bridge loan as per the conditions, could result in repossession. Therefore, it is important to fully consider the implications beforehand, when looking to secure bridging finance.
Why choose Bridging Options?
Sometimes in life you have to take the short term pain in order to achieve the long term gain. Although non status bridging finance is often considered to be more expensive that other types of funding; alongside the additional cost implications you get to reap the rewards of speed and convenience.
At Bridging Options, our knowledge of the market and breadth of diverse relationships make us the perfect partner for your fast non-status bridge loan. Offering access to a team of financial experts, our panel of brokers can help you find the best rates possible and assist with the rapid completion of paperwork.
So, if you are looking at non status finance options, call our bridging loan specialists or complete our call back form today.