The personal touch makes a difference
With the bespoke loans now available, even experienced brokers may be surprised by how flexible bridging can be, says Alan Margolis, head of bridging at United Trust Bank
I
ntermediaries are unlikely to need telling that the short-term bridging loan sector is enjoying a boom. The
existence of this Mortgage Strategy sup- plement is a clear indication of the grow- ing stature of the sector and evidence that bridging is now firmly out of the shadows of the past. Even those intermediaries with a
strong knowledge of bridging loans may not be aware of how flexible they have become and, although suitable for cer- tain customers only, they now offer a far greater reach of use and purpose than many intermediaries might have appreciated. There’s no doubt that when you men- tion bridging loans the first thing that rightly comes to mind is what has often been called the classic bridge. By this, most think of customers who
are buying and selling and need to bridge the gap between the two. But the cir- cumstances and facts behind even clas- sic bridges can vary enormously, as can be seen in the following scenarios.
Scenario one Customers are in a traditional con- veyancing chain when their purchaser pulls out or has to delay, such that the whole chain is threatened with collapse. In this case a bridging loan may be used to rescue the chain, with the loan repaid when the sale is eventually completed.
The
Scenario two This is another version of the classic bridge. It is also known as downsizing and is encountered by UTB’s bridging department on a regular basis. Here the customer is seeking to down-
size from their existing property which is often – but not always – unencum- bered. Usually, in this scenario it is not just a question of the existing property simply being too large. Often, considera- tions such as being closer to family are important. What matters is that the customer wishes to secure the purchase of the new property. Given the short-term nature of the finance requirement, not only are they unlikely to obtain a regular mort- gage, they don’t need a regular mort- gage. Bridging finance can provide a sensible solution.
Scenario three This is the straightforward classic bridge where customers are driven to complete on their purchase simply due to the lack of property on the market at the moment. Traditional providers dislike lending
where the customer has an existing res- idential mortgage so, subject to criteria being met, a bridging loan can facilitate the purchase, notwithstanding the fact that the customer, temporarily at least, will have two residential mortgages.
guide to Bridging Finance 2012 29
GUIDE TO BRIDGING FINANCE
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