How bridging lenders view adverse credit
Bridging is short-term, asset-backed lending, so the security and the exit carry more weight than a credit score. That is why many lenders will consider applicants that a high-street mortgage lender would decline. How far they go depends on the type of adverse and when it happened.
Lenders commonly sort credit histories into tiers:
- Minor or historic issues, such as a small satisfied CCJ or default more than a year or two ago, which some lenders ignore or price as standard
- Recent issues, such as missed mortgage payments or defaults in the last 12 months, which usually mean a rate loading or a lower maximum loan to value
- Serious adverse, such as an IVA, a debt management plan or bankruptcy, which only some lenders consider, often only once discharged
Several lenders on our panel have products built for adverse credit, and others consider it case by case. Matching your history to the right tier avoids declined applications, which can themselves make the next application harder.
The exit matters even more
With weaker credit, lenders look closely at how they will be repaid. A sale is often the most straightforward exit, because it does not depend on another lender's credit decision, and some lenders will only consider serious adverse where the exit is a sale.
If you plan to refinance onto a buy-to-let or commercial mortgage, the refinance lender will also check your credit. It is worth confirming early that a suitable term lender will accept your history, and how long it wants issues to have been settled. A bridge can buy time for credit problems to age, but only if the timing works.
What it costs
Expect a higher rate and a lower maximum loan to value than for clean credit. Some lenders add a set margin to the monthly rate for impaired credit, while others have separate products with their own pricing. Arrangement fees, valuation and legal costs apply in the usual way, and some lenders charge exit fees.
Putting in more equity, offering additional security or choosing a simpler property can improve the terms available. We compare the full cost across lenders, not just the headline rate.
Preparing your application
Lenders prefer to hear about adverse credit at the start rather than discover it on a search. A clear case usually includes:
- A copy of your credit report, so the details are accurate
- A short explanation of what happened, such as illness, a business failure or divorce, and how it was resolved
- Evidence that CCJs or defaults have been satisfied, where they have
- A realistic exit with supporting evidence, such as an agent's valuation or a refinance agreement in principle
We compare lenders on how they treat your type of adverse, then approach suitable lenders with a clear case. Instant Quotes lets you indicate your credit history and shows lenders that consider it, as a starting point. Final terms depend on each lender's valuation and checks.
If you or your family will live in the property
If the borrower is an individual or the trustees of a trust, and the property is, or will be, lived in by you or a close family member, the loan is a regulated mortgage contract with additional protections, and regulated lenders apply their own credit rules. We will tell you at the outset if that applies and how your case will be handled.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
