Why credit matters less in bridging
A mortgage lender relies on you making monthly payments for many years, so your credit history is central. A bridging lender is usually repaid in one sum from a sale or refinance, so its focus is on the value of the security and whether the exit is credible.
That does not mean credit is ignored. Lenders run credit searches, and adverse history affects which lenders will consider you, the maximum loan and the price. It matters most when the exit is a refinance, because the mortgage lender at the end will look at your credit too.
Types of adverse credit
Lenders look at what happened, how much, how recently and whether it is resolved. Common items include:
- Missed or late payments on credit cards, loans or mortgages
- Defaults, satisfied or unsatisfied
- County Court Judgments (CCJs)
- Debt management plans or Individual Voluntary Arrangements
- Discharged bankruptcy
- Mortgage arrears or a previous repossession
Older, smaller and satisfied items are viewed more kindly than recent, large or unresolved ones. Some lenders will consider a case with an unsatisfied CCJ where it is settled from the loan on completion. Current bankruptcy is normally a barrier, as is arrears on the property being refinanced unless the bridge clears it.
What changes when credit is weaker
Expect three things. First, a lower maximum loan to value, so a larger deposit or more equity. Second, higher pricing than the best rates for clean credit. Third, a narrower list of lenders, which makes comparing the market more valuable.
Lenders will also look harder at the exit. If you plan to refinance, they will want comfort that a mortgage lender will accept your credit history at the end of the term. If you plan to sell, they will want realistic pricing evidence. An exit that does not depend on your credit, such as a sale, is often easier to place.
How to strengthen the case
- Be upfront. Lenders find adverse credit on their searches, and undisclosed issues damage trust and slow cases down.
- Explain the circumstances briefly, such as illness, divorce or a business failure, and what has changed since.
- Get copies of your credit reports from the main credit reference agencies before applying, so there are no surprises.
- Offer a lower loan to value or additional security where you can.
- Evidence the exit thoroughly, particularly a refinance with a lender that accepts your credit profile.
Our documents checklist sets out the rest of what lenders will ask for.
Regulated cases and your home
If the property is, or will be, lived in by you or a close family member, the loan is a regulated mortgage contract and comes with additional protections. We will tell you at the outset if that applies and how your case will be handled. Regulated lenders must also assess affordability, which looks at income and outgoings as well as credit history.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. You can compare indicative terms from lenders on our panel through Instant Quotes, which asks about adverse credit so the results reflect it.
Common questions
Can I get a bridging loan with a CCJ?
Often, yes. Many bridging lenders consider CCJs, particularly if they are older, small or satisfied. Some will accept an unsatisfied CCJ if it is cleared on completion.
Do bridging lenders do credit checks?
Yes. Lenders run credit searches, but they focus mainly on the property and the exit, so adverse credit does not automatically rule you out.
Can I get a bridging loan after bankruptcy?
Some lenders consider discharged bankruptcy, usually with lower leverage. Current, undischarged bankruptcy is normally a barrier.
Will bad credit affect my refinance exit?
It can. The mortgage lender at the end will review your credit, so lenders want comfort that a refinance is realistic for your profile.
This guide is for general information only and should not be treated as legal, tax or financial advice. Lender requirements depend on the property and your circumstances.
