How can the self-employed access bridging loans?
There are around 4.5 million self-employed workers in Britain today. Obtaining a bridging loan is more difficult for them, but a number of lenders will provide loans.
About 15% of UK workers are self-employed, which means that there is a lot of business for lenders who are sympathetic to this demographic According to Richard Pike, writing on the website MortgageStrategy.co.uk in May 2017, there are currently a number of building societies that will provide a one-year bridging loan for the self-employed to help them break a house-buying chain.
Many lenders want to see at least two years’ accounts before making a decision on a loan application, but some lenders are now able to provide loans for new startups and can make a decision based on just one year’s accounts. Lenders can be more concerned with the value of the property rather than a borrower proving their income. Property is used as security for the loan, so in the worst case scenario, the loan can be repaid from the sale of the property.
Bridging loans for the self-employed are not restricted to the purchase of residential property, because bridging finance can be used for commercial and semi-commercial property deals. Full time landlords tend to be self-employed and use bridging loans to buy property at auctions, and to convert and renovate property.
A bridging finance broker can arrange a loan for self-employed workers, and will also be able to secure a more long-term mortgage finance for them.