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Posts Tagged ‘Bridging’

Bridging Finance-How does it get repaid?

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I’m surprised at how many enquiries I get from clients who taken out bridging finance through another broker who has not got a firm exit in place.

If you don’t have the funds to repay it there are only two ways it can be repaid, either the sale of the property or a remortgage.

With the remortgage, before you take out the bridge you need to ensure that both you and the property meet as many lenders criteria as possible. If you have only one lender to choose from, then in 6 months they not be lending in that market or at that LTV. That’s dangerous and can cause you a lot of problems.

If you are late repaying the loan most lenders increase the monthly interest rate which will quickly wipe out any equity you have in the property.

So focus on the exit before you take the bridge.

 

Bridging Finance – The importance of the exit.

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When going into bridging always work backwards. How will it get repaid?  If you only have one or two lenders then be very careful as those lenders may change their criteria and you may not be able to remortgage to repay the bridging loan. The implications if you are not able to refinance, are higher rates and possibly repossession.

The longer the period between getting the bridge and it’s repayment the greater the risk. Any experienced broker should be able to tell you what options you have before you take out the bridging loan.

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Searchlight Finance Limited is registered in England and Wales No.07929050 Searchlight Finance Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (http://www.fca.org.uk/register) under reference 743220. The FCA do not regulate Business Buy to Let Mortgages or most Commercial Mortgages and Bridging Finance. ICO Number Z3109319. Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.

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