Bridging Loan

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    Bridging Loan

    What are the best sort of rates (set up costs and monthly interest rate) I can expect on a bridging loan. This is to pay off a mortgage (avoid a repossession) due to a sale on the property falling through just before exchange. The exit strategy would be selling the property which is being actively marketed again now.

    Loan would be about 800k on a 1.4ish mil value property with high service charge.

    I have googled this a bit but wanted to check that the first results and sponsored links weren't offering unfavourable rates.

    Would need to be something with a fast turn around, like 72 hours ideally.

    Not sure if specific deals can be mentioned here, but an ideal of the best way to find a reputable broker etc. Time is of the essence, thank you.

    #2
    Bridging loans are the most expensive forms of a loan, and are for those who purchase property at an auction for example as the lead time for getting a mortgage may take longer than a day. You need to shop around and just contact some of the bridging companies to obtain quotes as the terms and conditions on exiting may be different with each company. Best to contact them.

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      #3
      Bridging is indeed expensive but in certain circumstances it might be the only option.
      If the property being offered as security is the primary residence of the applicant then that removes a number of lenders since this type comes under the Regulated Loan basis and some are not authorised to undertake such lending.
      There are two repayment options , pay the loan interest each month or allow the interest to be rolled up during the facility period. Most Bridge lenders do not apply Early Redemption Charges If the Loan has operated for at least three months. It is important that you apply for a loan over a realistic time frame since if the property hasn’t sold by the time the facility period expires a renegotiated facility will prove very costly so given the price attached to the property I would suggest a 9 month time frame or even twelve months , if the property is indeed sold sooner and has passed the 3 month ERC period then money has been saved.
      Rates are dependent on the loan to value with rates starting around the 0.55% rising to around 0.8% per month. There is a valuation fee which tends to be higher than that charged by conventional lenders and the valuation is based on a 90/180 day valuation, not the Open Market Value so be aware that it will be lower than the value you have accorded the property.
      The Loan carries a 2% Completion Fee part of which is paid on acceptance of the Offer. The lender will appoint its own legal representatives who will in turn act for the borrower. There are also fees for Title Indemnity, Bank Transfer etc but these are clearly detailed in the Indicative terms.
      I hope the above is of help?

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        #4
        Thank you both for the sound advice. I'm trying to work something out with this.

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