UPDATE MAY 2010
The credit crunch has taken its toll on the bridging market with many lenders closing their books and indeed a number of high profile bridgers have gone into administration (see NEWS tab).
However the market is improving and in recent months we have seen the return of a number of lenders and indeed some new blood. With the general consensus that property prices have troughed, and indeed are rising in certain locations, many lenders view that it is now time to return to lending and are actively pursuing opportunities, particularly as the High Street banks are not interested in funding speculative property transactions for traders, developers and investors.
At OPTIMA we are placing business with a number of active bridging funders and can source up to c. 75% of Market Value (MV) on residential property, 60% on commercial property and 50% on land with planning consent. Higher gearing (and up to 100% of purchase price) may be available with additional security.
The market is changing daily and rather than update this site with products and pricing we would ask that you call us to discuss your project and we will very quickly let you know whether we believe it to be fundable and if so at what amount and price.
A little more information about BRIDGING LOANS…
BRIDGING (purchase or re-finance, 1st or 2nd charge) is SHORT TERM FINANCE (generally up to 12 months, although open ended facilities are available) and may be used to raise funds on RESIDENTIAL or COMMERCIAL property and LAND with a variety of planning consents or established uses, for any legal purpose such as:
Purchase at auction, urgent completions pending re-finance with traditional bank finance, purchase of void property pending developing, re furbishing/re letting or change of planning use, raising cash for working capital, adverse credit repair, deposits for other property purchase, funds for refurbishment/development as well as acquisition……etc…
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Lender bases decision on value of property and identified source of repayment
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To 75% LTV (100% with additional; security)
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At OPTIMA we attempt to use bridging lenders that lend on MARKET VALUE (MV) and not RESTICTED VALUE (180, 120, 90 days)
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Owner occupied, tenanted, vacant properties
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Available to individuals, partnerships, limited liability partnerships (LLP) and limited companies (LTD Co). Where the borrowing is made to a LLP or LTD Co, personal guarantees will be required from the partners/directors
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Rapid decisions and completion, simple process, no meetings with lenders, business plans or accounts. DECISIONS within HOURS, OFFERS within A WORKING DAY, COMPLETIONS within DAYS
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Generally non-status.
NON-STATUS Bridging Loans are granted against the VALUE (not Purchase Price) of a property. Non-Status bridging lenders require four things:
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A valuation from an approved firm of Chartered Surveyors (often an applicant’s incumbent valuation will suffice)
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A bankruptcy search to ensure the borrower is not currently bankrupt (and therefore not legally able to borrow)
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Legal due diligence from their solicitor (which generally is expedited by the use of Title Indemnity Insurance, thus dispensing with the need to carry out a number of time consuming searches)
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An understanding of the eventual source of repayment of the loan
Pricing of non-status bridging reflects the risk and will generally be in excess of 1% per month.
STATUS Bridging Loans are granted against the VALUE of a property but the lender will underwrite against the BORROWER as well as the property. Therefore borrowers will provide details of assets, liabilities, income and expenditure and pricing at generally sub 1% per month reflects a reduced risk to the lender.
Refer to PLANNING GAIN and PROPERTY DEVELOPMENT/Developers Equity Release for details of these specialist bridging products.
Refer to CASE STUDIES for examples.
