Mortgage expert Mike Collins: Does a bridging loan affect a mortgage application?

Financial advisor Mike Collins says the best advice he can give is to do your research and get in the best financial position to proceed with your real estate purchase. Bridge financing can give you an edge and help you avoid the long wait for your mortgage approval or the risk of losing deposits already made.

To understand whether a bridging loan affects a mortgage application, it’s important to first understand what the two products are. A temporary loan is very different from a mortgage, mainly because of the term of the loan.

Mortgages can last up to 35 years and have high values with low interest rates, while a bridging loan is designed as a short term loan with high interest only to “fill” a financial gap.

Mike says, “A bridging loan can put you in a better position than other buyers to build your dream home, even if you haven’t sold your old home yet.

“There are some considerations for both, including credit scores, interest rates, and more, so we hope this article is helpful to those looking for a new home.”

How does a Payroll Loan work?

The purpose of a bridging loan is to close a temporary funding gap. This may be the first or second assessment against your property.

First Collection: A temporary loan is the main loan for your home, for example if you own a home and need a loan for renovations. This is your home’s first load.

Second charge: If you already have a mortgage on your home, this is the first charge. A temporary loan is the second, and it’s the order in which your creditors get paid if you can’t make your monthly payments.


Having a temporary loan won’t necessarily affect a mortgage application, but you need to look at your credit score in context.

You may have been turned down for a mortgage because you have bad credit or low income. With an interim loan you can buy your dream home before another, more wealthy buyer comes along. That’s why an exit strategy is essential, such as moving from a bridging loan to a mortgage when you qualify.

But does a temporary loan affect your credit score? Well, it totally depends on your lender. Some may choose to look only at their overall credit score before deciding whether to hand over money.

There are many loan companies and lenders that specialize in bad credit settlement loans.


Interest rates are the highest they’ve been in decades, and you may have to pay additional administrative fees.

Then consider why you need a temporary loan. When it comes to protecting your ideal home, it can certainly be worth paying to help protect it.

But then you should also consider taking out the loan against your home, which means you have an equity to settle with it.

Monthly payment

Unlike bridging loans, mortgages can be purchased with principal or interest payments only. Interest-only mortgages are more common than buy-to-lease mortgages, and residential mortgages usually have the primary payment. The interest is in any case paid in regular monthly installments.

Whatever you choose to finance your home, consult a financial advisor first and check interest rates. A variable interest rate may be too risky for you right now.

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