more closely for all the right reasons. It goes on to say that it has concerns


over the appropriateness of bridging finance being used as a means of repay- ing mortgage arrears, particularly for those under the spectre of repossession. “Given the decline in the sub-prime


market we are concerned about whether bridging products are being inappropri- ately targeted at vulnerable, credit- impaired consumers, with promises that they will rehabilitate the consumer and improve their credit scores,” the paper states.


As a lender that has been operating for


nearly 30 years, we are well placed to say that we have seen all types of bridging loans and have a dedicated team to ensure the business we write is what’s best for the client in their situation. The exit route for all bridging loans is


key and if our credit committee feels the proposed repayment strategy is not viable, we will not lend. It is as simple as that. The FSA has made it clear that it will consult more in the sector and hav- ing authorisation already is a huge plus for any lender looking to grow.


 Case Study: Clients looking to downsize


We were approached by a successful couple looking to downsize. They had committed to a property purchase and were expecting funds from the sale of their business to finance their purchase. Unfortunately, the sale was delayed and they required a bridging loan. The loan was classed as regulated as our security was the property the clients were


purchasing as their main residence. As they had already exchanged they were under a tight deadline to complete and had only five days before they lost their deposit. We advised them that on average loans complete within seven to 10 working days, depending on how quickly all parties act. We explained that it is mainly the legal side of things that can take the time but we assured them we would do all we could to make sure the process ran smoothly. This was a case that appealed to us as the need for the bridging loan was obvious with


a good exit route in place. They were in the final stages of selling their business, which would net them a significant profit, and the sale of their current home, which was already being marketed, would provide the remainder of funds to repay the loan. We were instructed on a Friday afternoon and went straight into action. We immediately instructed the valuation and the appointment was booked for the following Monday morning. The report came back the same day and the valuation was signed off within 24 hours


– if only every valuation was this quick. The client’s solicitor and broker were helpful and supplied the information required


straight away. Equally, our solicitor was just as efficient in providing the legal pack to the borrower’s solicitor within an hour of receiving our instruction. However, not all cases run as smoothly as we would like and in this instance the legal pack was not returned immediately, which caused delays. Then a major hiccup occurred when the clients signed the offer letter in the wrong place as this resulted in it not being legally binding. Alarm bells started going off as this was the day before the deadline and completion did not look as it would happen in time. Although we were unsure whether completion would take place the next day, we still


proceeded to the final sign-off in the hope that it would go ahead. This paid off as the correctly signed offer letter arrived at our solicitors office at 11.30am the following morning and resulted in completion of the loan within the required timescale. Overall it was a successful loan that managed to complete within a five-day turnaround and we were pleased to have met the clients’ and broker’s expectations.


The guide to Bridging Finance 2012 27


GUIDE TO BRIDGING FINANCE


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