Bridging loans/short term finance.

[Roger66]

Hi all, I have been looking at bridging loans as a way of financing the rest of a commercial mortgage on a property I wish to buy. Can anyone tell me if this kind of finance is the right choice or are there other ways such as private lenders etc..... The amount I wish to borrow is around £150,000.

Thanks in advance!

 

[tony84]

Do you have an exit strategy for the bridging?
You effectively have the loan for 12-24 months, but it then needs paying off.

Also what Loan to value (LTV) would the bridging take you upto? Its difficult to go beyond 80% of the properties value unless you are able to offer up additional security (eg another property for the loan to be secured against, on top of the commercial property).

 

[Roger66]

Hi, I currently have a house which I have a mortgage of £250,000 and has just been valued at £525,000. I need this money before the end of august so the time limit is tight. I could just sell the house but I don't think it would complete in time.

 

[tony84]

Most bridging companies will accept this i think, so i imagine you should be fine.

 

[Roger66]

Do I have to make monthly payments with a bridging loan or do I pay the full amount back plus interest at the end of the monthly terms say in 12-24 months time?

Many Thanks!

 

[tony84]

You pay it back monthly, but you can do interest only.

Ive just done a quick calculation - repayments would be around £2,700 on interest only - thats based on 1.5% per month (18% per year). Its only a basic calculation to give you a ballpark figure.

 

[Roger66]

Ok, well that's given me something to think about. Many Thanks for your help mate.

 

[businessfunding]

Is the plan to sell the house or is this fall-back?

As Tony has said, bridging is good for relatively short period with a clear exit

Another alternative might be a 'crowd' business loan over 5 years, with a charge on the residential property

I should add that your primary lender will take into consideration other borrowings in thir calculations

 

[Talay]

Refinancing existing 48% LTV on main residence to 76% to raise £150k and offer commercial property as additional security and you could surely do a damn site better than 18% pa.

 

[PDRD]

As Talay says, remortgage your cureent house.

Sent from my GT-I9305 using UK Business Forums

 

[PDRD]

Or take a second charge mortgage out against it

Sent from my GT-I9305 using UK Business Forums

 

[tony84]

Im not allowed to give specific advice on forums, but I would agree with Talay in that its an option i would be looking at.

 

[businessfunding]

All of the posts here are valid - and all are missing one vital ingredient - knowledge of your own needs and circumstances

The only thing I would add is don't get fixated on rates or APRs - look at the actual costs to you in acheiving your specific goals - rate comparisons only work on like-for-like products.

 

[SAK2020]

If you would look legal advice / assistance on the pros and cons of bridging loans i would highly recommend Elite Law Solicitors (Brighton Office). I have used them on a number of transactions involving bridging loans over the years including bridging loans for auction properties. I've always found them to be super knowledgeable and efficient. www.elitelawsolicitors.co.uk/bridging-loans-for-auction-properties

 

[MikeJ]

I suppose he may still need help 10 years later.