How do bridging loans work?

The improving economic climate and growing availability of bridging loans have led to bridging finance becoming an increasingly appealing option for investors and businesses.

The process

Whether your client opts for an open or closed bridging loan, they can expect the following when dealing with a master broker like Y3S Bridging Á Commerical:

  • The broker receives a basic enquiry from an introducer whose client needs an unusual or specialist finance solution. We contact your client to establish the specifics.
  • A suitable lender is chosen and provided with a summary of the case, reasons for wanting a bridging loan, the security available and a clear repayment strategy.
  • Lender receives evidence (if applicable) of the new property purchase and proof of the price to be paid.
  • Lender issues an offer letter stating the terms of the proposed finance & what is required to be done to obtain that finance.
  • Lender instructs a valuer to provide a valuation report and sends all documents to your solicitor.
  • Solicitor explains the terms and conditions of the loan
  • Client signs all documentation.
  • Funds are released to the solicitor for legal completion.
  • The bridging loan monies are sent to the client.

The process usually takes 1-4 weeks. Sometimes, this can be reduced to just a few hours, depending on the case and the set of circumstances involved, and crucially, what evidences the client has available. Similarly it could take longer in the case of a complex development loan which requires a number of conditions to be discharged by the Local Planning Authority.

Once your client receives their loan, they will be expected to repay the loan back by the end of the term. Interest payments can be made in monthly instalments, or in whole when the entire loan is repaid or retained from the loan at the commencement of the loan.

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