Short term Bridging finance - Do you ever use?

[Qld's007]

Just a general question to all of the other mortgage brokers on the site.

Do you find that you need to utilise this market much?

I am aware of many lenders that offer this type of funding but not sure how much business they do.

Guess there is a market but would be interested to hear others comments.

 

[David E-Noosa]

Not a broker but as an agent I have had 3 buyers in the last month use bridging finance to purchase before they sold.

 

[Sunfish]

I'm not in the industry but over the years I have heard of bridging finance going bad quite often. It's clear that in a bull market you have nothing to lose but in times like there where (to put it kindly) there is some indecission on the market's future, anyone travelling this road is in double jepardy.

T

 

[David E-Noosa]

I would agree with that Thommo, its not something I would do in a level or down market. But its an individual thing and suits some but not everyone.

 

[Qld's007]

Guys thanks for the response.

I guess i was more really wondering whether the mortgage brokers on the site had used such for emergency cases where the Sherriff was knocking on the door with a mortgage in possession or a client had 2 days to arrange funding etc etc and a short term bridge was used to buy time to allow conventional longer term funding to be arranged.

 

[juzz]

Guys thanks for the response.

I guess i was more really wondering whether the mortgage brokers on the site had used such for emergency cases where the Sherriff was knocking on the door with a mortgage in possession or a client had 2 days to arrange funding etc etc and a short term bridge was used to buy time to allow conventional longer term funding to be arranged.

QLD's007

I've lent money (Bridging Finance) to developers where they had'nt settled properties from other projects. And they've needed to settle their new purchases.
It can work well but there are dangers and the interst on short term Private money is extremely high.(5-10% or above per month with security and the 1st mortgagee's agreement)

Banks & 2nd Tier Lenders can arrange it(on standard rates) as well as long as you are able to service the whole debt in the worst case.It's done to help secure the new loan and the client(borrower) but must be arranged with ample time if done with the Banks/2nd Tiers.

From Private Financiers.
The exit strategy has to be clear and if progress on re-financing or repayment of the short term loan isn't made on time, then the Lender has to re-analyse the whole loan and be prepared to either
1 Take other securities and make a new arrangement or
2 Start marketing a fire sale of the securitized property
3 Give them extra time ie increase leverage.

Justin