One of our bridging brokers, Callum Taylor, recently completed a six day bridge for a client; the client had an expired mortgage on one of their buy to let properties and the lender had given them 14 days to come up with the funds.
As the mortgage term had expired, the lender had applied a daily charge, so as each day passed, more interest accrued, making it extremely expensive for the client. Therefore, it was necessary for us to work quickly, in order to save them as much money as possible.
As well as time, the ownership of the property posed a challenge. The property was part owned by the client, and two other parties. Multiple applicants slows down the process as it increases the legal work for both the lender, and the client’s solicitors.
Furthermore, the nature of the owners was a perceived obstacle. With one owner in their 80s, and the other two with no income to show other than rental, it was a situation many lenders would be deterred by.
Callum approached a lender who would offer a non-status loan, which means they won’t look at any other assets, expenses, credit card ratings, income, etc. All the lender looked at was the asset for which they needed the loan.
Callum managed to secure the client a rate of 0.89% per month over a year-long term.
RATES VS. SPEED
Although there are cheaper bridging rates on the market, we always have the conversation with a client about their priorities in terms of speed or cost. If a client needs a loan quickly, as is the case here, they should be prepared to pay a slightly higher rate. If a client has time on their hands – which is not often the case with bridging – then they can afford to hold out for a lower rate.
The cheaper the money, the more checks a lender will carry out. Callum comments: “The way I see the bridging market going is away from quick bridging, with short-term loans now taking 4-6 weeks to complete. Now, it’s almost like a short term buy to let loan, as they want to see your income, rental income and other assets in the background. So, non-status loans are quicker and can be done in 5-10 days, but they will come at a price.
However, if you have fees building up, a more expensive rate might well save you money in the long run.”