value for whatever reason, they need to be comfortable that it was bought cheap for a reason and there’s a justifiable open market value at the end of the refurbishment project and not be nervous to take that bridging loan. LG: no long-term funder is going to fund anything in this day and age unless that asset is actually yielding cash at the time. that’s what the bridge is providing, to take that asset into a cash flow yielding asset providing it ticks all the other boxes in terms of interest cover, credit rating of the applicant and ultimately evaluation through primary triggers then it’ll happen. AC: the product you just described is the most obvious type which is going to come out the quickest because it’s pretty easy for the term funder to go and value the property. It either stacks up to the point where they’ll take it on or it doesn’t. It’s the other issues around credit where the borrower is nervous about the credit or whether it is going to stack up so they’re going to take a bit more of a punt. or they’re not buying the property under value, they’re actually buying the land and building on it which probably carries more risk. GL: there’s still a misunderstanding from the term lenders with what bridging finance is actually all about. they won’t get the comfort to turn around and change their six month rule, they don’t understand what they’ll be taking out and they still don’t. AC: And that six month rule has got nothing to do with bridging finance. that six month rule is to do with flipping property. So you’re buying
What appetite is there from lenders other than bridgebank and precise for developing that type of product?
CS: At omni we’re still relatively new so we are in the process of refining our product range but it’s fair to say that it won’t be anything revolutionary at the moment. GL: We’ll keep our eyes on what’s going to happen but at this moment we’re not any further down the line. LG: the real thing on the term product is that we’ve all got different cost of funds structure. our ability to go directly into a term product which is very much market driven, it’s probably impossible with our current funding structure.
What do lenders take into account when considering a deal?
property at five to midday on one deal and it was being refinanced at one minute past midday for 25% more value, so that’s why that six month rule is there. GL: but when I talk about scenarios like when there’s been added value, why can’t they take an objective view? And that’s when they’re nervous about the roots in the first instance with the funding. Sameer Kanabar: on the commercial side like Aldermore, if there’s evidence of work that’s been done then they’ll still take it out within the six months. AC: So there is some movement there, it’s just that there’s probably a bit of a time lag for some of the other lenders.
TIUTA
LG: I don’t think we have a tick box scoring system process which institutional lenders do that have 100 mortgages a week. In relative terms, the volumes all bridging lenders do is small so we can individually write every case. the credit assessment is part of the underwriting but it hast to be done. Kit: bridging deals are being underwritten based on the exit requirement. If an exit route exists then the bridger, primarily is happy provided everything else stacks up. More often than not they’ll be looking at a client’s credit file and be aware that the client can get a deal with x, y, z lender or they can’t because they’ve got a county court judgement or missing mortgage payment. GL: It’s all about having a common sense approach to your lending.
The Straight-Talking Bridging Loan Company property solutions
0870 7777205 www. t iutapl c . com
Minimum Loan £30,000 1 Day - 1 Year Term
brIDgIng IntroDucer september 2011 25
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