No, you cannot get an unsecured bridging loan. This type of finance is always provided on a secured basis, meaning you will need to have the appropriate asset to secure the loan.

The asset required can vary depending on the lender, your project, and the details of your application, which we’ll go into more detail about later on in this guide.

 

What Unsecured Bridging Loan Alternatives Are Available?

You can take out an unsecured loan, which does not require a valuable asset to be secured. If you’re unable to take out a secured loan due to a lack of property/asset, this type of finance may be a better option to consider.

 

Loans-without-security-application

 

You may be able to take out an unsecured loan over a short period of time. These types of loans can be arranged quickly, however, can have high interest rates.

With an unsecured loan, lenders may also rely on other details of your application to feel secure in who they’re lending to, such as the applicant’s credit score.

There’s a wide range of different loans available on the market that won’t require a valuable asset as security, catering to a range of different circumstances, borrowing amounts and periods. It’s important to understand exactly what you’re looking for in a loan, and what details you’d need accommodating for (e.g., an adverse credit history), to help you filter your search for the best loan without security.

 

Secured vs Unsecured Lending

Both types of loans have their own pros and cons, and the best fit for borrowers will be dependent upon their unique circumstances and requirements.

With a secured loan, borrowers may be able to borrow significantly larger amounts in comparison to personal, unsecured loans. Borrowing amounts for unsecured loans typically go up to around £25,000, whereas with Octagon Capital, the minimum amount you can apply for with a bridging loan is £50,000.

An unsecured loan will also often require applicants to hold a good credit score, helping to provide reassurance that they can keep up with repayments. It’s for this reason that secured loans can be seen as more accessible to those with adverse credit histories (provided you have a valuable asset to secure the loan with), available for those that don’t hold a perfect credit history with the property, reassuring the lender that the loan will be paid off.

However, by securing valuable assets like your home onto a loan, you could end up losing it if you can’t pay back the loan. This can be a big risk to take, so it’s important to only take out such a loan when you’re confident that you’ll be able to keep up with repayments.

 

Should I Consider a Secured Bridging Loan?

If you’ve got a valuable asset to secure on the loan and are confident that you’ll be able to pay it back in time, a secured bridging loan is worth considering.

 

Consider-bridging-loans

 

A bridging loan can be used for a variety of different purposes, including the following:

  • To help you buy a new house
  • To help fund a property development project
  • To help raise finance

When in between the sale of your current house and the purchase of a new one, bridging finance can help “bridge” the gap between the two, lending you the funds to purchase the new property before the existing one has been sold. This can be great for those who are at risk of losing their dream home waiting around for their current property sale to go through.

Bridging loans can also be used to help fund property development projects. If a property developer wants to refurbish a property or block of flats to sell them for a higher price, they can help fund this via a bridging loan.

You can also use a bridging loan to raise finance for investment opportunities, for example, putting money into another property or a business. For those with an existing bridging loan or a mortgage (a first charge) with any equity left over, you can use this to take out another loan (a second charge), for such opportunities.

 

Am I Eligible for a Secured Bridging Loan on an Unmortgageable Property?

Yes, you can still be eligible for a bridging loan even if you’ve been refused by a mortgage lender.

The term “unmortgageable” is used for properties that mortgage lenders refuse to touch. This can be due to the lack of a kitchen, bathroom or for various other reasons.

Even if a property is unmortgageable, you may still be eligible for a bridging loan, and even use the funds from this loan to make the property habitable, and therefore able to later sell at a profit.

If you’re unsure about whether a bridging loan is right for you, get in touch with Octagon Capital to discuss your options.