Bridging loan to a mortgage, also good for credit ?

assimilate_2

Hi all,

Im now looking to take out a bridging loan for a few months and just wanted clarrification on a few things.

1. Is it easier or harder getting a mortgage after taking out a bridging loan.

2. how significantly better is it showing payments made on time for the monthly interest of the bridging loan compared to credit card purchases?

3. Will a lender be more inclined to offer a mortgage after seeing the payments of said bridging loan made on time.

Cheers :j

Thrugelmir

Use of a bridging loan is unlikely to cause a lender to internally "score" you as a borrower any higher. If you able to obtain a bridging loan than a mortgage (within reason) shouldn't be an issue in any event.

ACG

It is difficult to answer your question.
Not all bridging lenders will put a mark on your credit file - so its unlikely to help your credit score.
If you have bought the house with a bridging loan and moved in, then you may have a lower score due to change of address recently.

Lastly, not all mortgage lenders will lend on a property that was purchased with a bridging loan.

So very difficult to give a definitive answer. But other than that, it is a very expensive (and risky) way of trying to improve yoru chances of getting a Mortgage.

assimilate_2

Hey thanks for the reply guys!

It seems very strange that a bridging loan will not have a positive effect on a credit file by paying back the monthly payments on time for a big loan, and also given it is part of your credit history!

ACG the purchase of the house was not purchased with a bridging loan, im looking to take one out for property improvments and then sell on or remortgage the property, will a lender view a remortgage any different when a bridging finance company occupys 1st charge against the property ?

I have other questions to ask in regards to taking a mortgage out but think it would be better suited for an additional thread to be created.

Cheers !

Caz3121

assimilate wrote: »

im looking to take one out for property improvments and then sell on or remortgage the property,

would a personal loan secured or unsecured not be suitable for this? Interest rates are high for bridging loans and renovation work can often take longer than the plan so you could ultimately end up paying more in interest than taking a 3 year loan for example and paying it off on remortgage

ACG

When you are taking out a bridging loan, they will want to know your exit strategy. Basically, how you will clear the loan in 12 months. Sale/Remortgage are both viable options.

Not all Mortgage lenders are happy to be the exit strategy to a bridging loan, so you will have less options, but it does not necessarily mean it will cost you more.

Brock_and_Roll

If you are able to get an open bridge (which trust me, can be very scary indeed if anything goes wrong with your plans) then you probably already have a pretty good credit rating!

assimilate_2

Caz3121 wrote: »

would a personal loan secured or unsecured not be suitable for this? Interest rates are high for bridging loans and renovation work can often take longer than the plan so you could ultimately end up paying more in interest than taking a 3 year loan for example and paying it off on remortgage

No, as a personal loan secured would require longer processing opposed to a bridging loan as they require all sorts of checks, plus they are long term but not a long term solution, the long term solution would be a remortgage, moreover, i only plan to use the bridging loan for a few months.

ACG wrote: »

When you are taking out a bridging loan, they will want to know your exit strategy. Basically, how you will clear the loan in 12 months. Sale/Remortgage are both viable options.

Not all Mortgage lenders are happy to be the exit strategy to a bridging loan, so you will have less options, but it does not necessarily mean it will cost you more.

Hmm... isn't it the same exit strategy when you want to switch lenders?

Brock_and_Roll wrote: »

If you are able to get an open bridge (which trust me, can be very scary indeed if anything goes wrong with your plans) then you probably already have a pretty good credit rating!

No, as the majority involved in bridging finance don't require any credit checks, they are simply interested in getting a first charge secured against your property.

Cheers!