Roughly summarised, non-status bridging loans refer to loans provided exclusively on the basis of collateral. The idea is that just as long as the borrower is able to provide sufficient security to cover the full cost of the loan, their past financial performance is unimportant. Instead, it’s simply a matter of determining their capacity to pay the loan back as required.
The term “status” is used in reference to the extent to which any given borrower can provide evidence to support their financial situation. In the most typical example, borrowers looking to obtain non-secured finance, such as conventional loans, are required to demonstrate how strong and stable their financial position is. As there is no collateral required for a personal loan, the lender must base their decision purely on the supporting evidence provided by the borrower.
Employment contracts, bank statements, and credit reports all combine to paint a picture of the borrower’s financial status.
Depending on the service provider you work with, it may be necessary to prove your financial status to a certain extent, though not quite at the same level as a typical unsecured loan. For example, if you’re only able to offer enough collateral to cover the cost of the loan, you may also be required to demonstrate your status. Though it’s comparatively rare, some lenders ask for collateral to be provided to secure the loan while at the same time carrying out credit checks.
In most instances, however, no additional evidence of status is required in order to apply for and successfully receive a secured loan.
The benefits of non-status bridging loans
Unsurprisingly, therefore, the biggest advantage of a non-status bridging loan is accessibility. Now, more than ever, it’s far too easy to blemish what may otherwise have been a relatively strong credit score. Even just a minor hiccup here and there can be enough to cause significant damage to anyone’s credit report. In such instances, you could then be looking at several years before once again qualifying for any kind of traditional, non-secured finance.
The primary difference with non-status bridging loans is the focus on the present and the future rather than the past. Those who specialise in non-status bridging loans are typically uninterested in the financial performance of the borrower up until the time they apply. Irrespective of how chequered their financial history may be, the only thing that matters is whether they can pay back the loan as required right now.
If they are able to secure the loan appropriately with sufficient collateral, nothing else matters.
Non-status bridging loans can therefore be great in instances where the borrower may be unable to qualify for any other kind of finance. Not to mention, when funding is required as quickly as possible, non-status bridging loans are typically paid out within a matter of days.
From unexpected business expenses to purchasing properties at auction to limited-time investment opportunities, non-status bridging loans can be worth their weight in gold at the right time and for the right borrower.
For more information on any aspect of non-status bridging loans, contact a member of the team at Bridgingloans.co.uk today.