Applying for bridging loans - brokers vs. applying directly

Applying for bridging loans is not hard

If you have used the services of a broker to buy a mortgage in the past, you may believe that this is the best way forward when it comes to taking out bridging finance as well.

There is certainly a case for going through a broker.

They will source various deals and talk you through them. They will also complete the application form and liaise with the company on your behalf, meaning there is little work required on your part.

So if you are unwilling or unable to deal with the process yourself, the appeal of using a broker can be hard to ignore.

However, there are various downsides to using a broker that you must take into account before you decide which way to go.

To begin with, applying for a bridging loan is a simple process. Bridging loan companies will ask you to provide various pieces of information, including any mortgage arrears you have, the value of your property and any debts you may have.

These are all details that you can easily find out yourself. Once you have the information required of you, the next step is to simply fill out the form, which will take a matter of minutes if you are fully prepared.

As a result, you do not really need somebody else to take care of this for you.

Brokers work on commission and receive a fee from the lender who you ultimately decide to go with. They therefore have vested interests, so you must keep this in mind.

One benefit of going through a broker is that they will source various deals and present them to you for you to choose, so you do not have to sit down and explore what different companies are offering.

This will save you time, however, brokers are unlikely to explore every offer and may instead present the five most popular products. This means that you may miss out on a better deal.

If you take these points into consideration, you will see that there is a strong case to be made for handling the loan application process yourself.

The forms are easy to fill out, the information required of you is not particularly complex and it does not take too long.

What's more, you can seek advice on bridging loans free of charge if you contact the lenders directly.

Bridging loan companies are more than happy to talk you through the process and answer any questions you may have, so you can get any help that you need.

This has the added benefit of allowing you to communicate with the company, spell out your needs and discuss with them the best way forward.

Whether you decide to go through a broker or carry out the process yourself, you must be absolutely sure that a bridging loan represents your best option.

To do this, you need to compare them to other forms of finance available to you and weigh up the advantages and disadvantages of each before coming to a decision.

If your funding needs are temporary and you have a clear exit strategy, a bridging loan could be a very useful way of raising the money you need.

However, if you have underlying funding problems, you may benefit from exploring other avenues.