Controlled by the Banks?

Something you may not know, but will have a critical impact on your bridging loan application, is how your prospective bridging finance lender is funded.  It is often the case that the bridging loans provider has several layers of funding, that may comprise 60-70% from a major bank, topped up with 20% from a hedge fund, and another 10% from private investors.

The reason that this is important is because the lender that is lending the highest amount – the high street bank – calls the shots.  This means that the high street bank whose restrictive criteria you are trying to avoid, is actually underwriting your application behind the scenes – even though you think you are dealing with a bridging loan company.  This obviously impacts on the likelihood of getting a green light on your bridging finance application.

Are loans really 70% Loan to Value – or Loan to Purchase Price?

Many lenders advertise headline LTV’s of 60% -70%, or in some cases even higher.  However, the devil is in the detail – buried in the small print you will often find “Loans or based on a percentage of value – or purchase price, whichever is lower”.

All those budding investors who think they can snap up an under value bargain from the administrator with 100% funding had better think again.

So why pay expensive bridging finance interest rates when I might as well go to a bank?

Good question.  Many bridging loan lenders require full underwriting.  They will insist upon 3-6 months bank statements, copies of your tax documents, and a copy of your chartered accounts from your business.  Not only that, but they will then insist that you must put down 15-40% deposit!

To save all of this hassle, ensure your bridging loan lender is a pure – non status lender, that lends on the basis of value not purchase price – and is funded exclusively by private investors, outwith the clutches of the banks.

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Our advice is free, so whatever your financial requirement, please call us today on 0843 289 3858 or email enquire@purebridge.com

The first stage is an informal and confidential discussion entirely without obligation – you can also apply for bridging loans online through our site www.purebridge.com

Q: What is an unregulated bridging loan?

A: At Pure Bridge we only arrange bridging loans for residential investment property, commercial property and land – with or without planning permission.  We do not lend against the property if the borrower is going to use the property as their main residence.  To do so, would mean that the loan falls under the “Regulated Loan” criteria laid down by the FSA.

In simple terms, if you are going to reside in more than 40% of the floor area of the property that is being used as the security for the loan, then the loan will be regulated.  This then means that you can only deal with an institution that has been trained and certified by the FSA to comply with the Mortgage Code, and various other regulations pertaining to a loan secured against an individual’s home address.  These loans are more restrictive for the lender, and afford an element of protection for the borrower in the case of default.

Q: Do lend against the property value or the purchase price?

A: All our bridging loans are based upon a loan to value taken against the “Open Market Value” (OMV), often referred to as “Current Market Value” (CMV).  This is the true value of the property given a willing seller and a willing buyer with no artificial time restriction placed upon the property, such as a forced sale within 90 days.

Most other lenders will only lend on the basis of purchase price, and will obligate the borrower to find a deposit of 15%+.  However, at Pure Bridge, if you have managed to secure an under value bargain from an administrator, then we can lend up to 100% of the purchase price, with no obligation to put down any cash.

Q: Why do you normally recommend a bridging loan is taken out for no less than 3 months, but no more than 6 months?

A: A Bridging loan or bridging finance is a niche funding solution that is used for property investors to take advantage of opportunities that would not otherwise be available using a high street mortgage.  Often, the bridging loan is repaid either via the sale of the property, or by refinance with a mainstream lender.  It is for this reason that we recommend the bridging loan is taken out for at least 3 months when refinancing with a mortgage, and 6 months for a proposed sale.  This is to give both sides some breathing space in the event things don’t go exactly to plan – which is often the case.

More Questions and Answers to follow in our next article.

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Our advice is free, so whatever your financial requirement, please call us today on 0843 289 3858 or email enquire@purebridge.com

The first stage is an informal and confidential discussion entirely without obligation – you can also apply for bridging loans online through our site www.purebridge.com

This is where the true value of a bridging loan or bridging finance from Pure Bridge becomes clear.  At Pure Bridge, all our loans are completely non status, with absolutely no credit checks or affordability checks.  There is no need to see your bank statements or tax documents, and in the case of companies we don’t even need to see accounts.  A bridging loan from Pure Bridge is based upon the following three simple factors:

• The property being used as security
• The strength of the person borrowing the money
• The strength of the loan exit strategy

As long as the project makes sense and you have a good idea how the bridging loan is to be repaid, then we are happy to lend.

INDEPENDENCE GIVES SWIFTNESS OF ACTION

Through our exclusive network of High Net Worth (HNW) investors, Pure Bridge sources, packages and underwrites each deal, thereby removing the impediment of dealing with bank imposed restrictions.

APPLY NOW

Our advice is free, so whatever your financial requirement, please call us today on 0843 289 3858 or email enquire@purebridge.com

The first stage is an informal and confidential discussion entirely without obligation – you can also apply for bridging loans online through our site.

If this sounds familiar, then a bridging loan could be the right answer for you and your business.

BRIDGING FINANCE CHECKLIST:

• Do you need to raise funds in a few days?
• Do you want to bid for an undervalued or auction property?
• Do you want to enhance or refurbish a property?
• Do you have no accounts or proof of income?
• Did an existing mortgage offer get pulled?
• Do you need to pay off arrears?
• Do you have a short-term cash flow problem?
• Do you need a deposit to secure another property investment?
• Are you in a broken residential chain?
• Do you need a bridging loan?

Unlike many other bridging lenders, Pure Bridge can arrange a bridging loan or bridging finance based upon the open market value of the property –NOT the purchase price.  This means that in certain circumstances, you could even get 100% of the funds that you need for your property investment.

Unlike many of the major bridging lenders, when you apply for your bridging loans with Pure Bridge, you no longer have to worry about credit checks or having to provide bank statements or Inland Revenue documents.  In fact, you don’t need any proof of income.  All the loans that we provide are completely NON STATUS – with no affordability checks or credit checks, with the decision to lend based purely upon three factors:

• The strength of the asset
• The strength of the borrower
• How the loan is to be repaid

Because we are also in business, we understand that cash flow and affordability is not always the key to success.  We are interested in your project, your experience and your loan exit – that‘s it!

APPLY NOW

Our advice is free, so whatever your financial requirement, please call us today on 0843 289 3858 or email enquire@purebridge.com

The first stage is an informal and confidential discussion entirely without obligation – you can also apply for bridging loans online through our site.

These specialist loans are usually only required for between 1month and 6 months, and are different from the normal banks since they can be arranged in a matter of days, instead of the many weeks and months we are all used to.

A Bridging Loan from Pure Bridge also differs from the mainstream banks in that all loans are Non Status, therefore no credit checks or affordability checks are carried out, with all fees and interest deducted from the loan advance on the day of completion.

Other useful reasons why you may consider a bridging loan are:

• Funds can be available in a matter of days.
• You may wish to buy a property at auction.
• You might have found a below market value opportunity, and wish to borrow on the basis of the property value, NOT purchase price..
• Perhaps you wish to benefit from planning gain or increase in value due to refurbishment.
• You may require additional cash flow through a second charge loan.
• Perhaps you have erratic or no provable income, but have found an investment?
• Maybe your mortgage lender has called in their loan, and you need to pay them back urgently?

Bridging finance is available for almost all types of properties whether it is residential investment, commercial premises such as offices, industrial units and pubs, hotels or land.  A Bridging loan can help you to beat the competition in the fast paced property arena, thereby taking advantage of opportunities that present themselves at short notice.  Quick cash and speedy approval are the reasons for its popularity. However, bridging loan finance is only recommended when you are sure that the property being used as security has a good market value and could be sold or refinanced within a fairly short time frame.

What this means is the value whereby there are no restrictions or “special assumptions” placed upon the sale, such as a 90 day marketing period.  When these assumptions are applied to the value, it can often drastically reduce the value of an asset, especially those properties that have a narrower market i.e. land or certain lifestyle properties such as a rural pub.