Are closed bridging loans still available or is it just that the criteria changed?

Do Closed Bridging Loans Still Exist?

With all lenders tightening loan criteria, what actually constitutes a closed bridging loan in todays market place?

Do Bridging Lenders actually offer a "Closed Bridge" service anymore?

It has always been the case that most bridging deals are written on an open "basis". However the days when one could get a lower price for a "closed" deal have all but gone - and here's why!

When the lending market was booming all that was needed was "decision in principle" (offer letter) from a mortgage lender and for contracts to be exchanged. To be fair to the banks, that was always the best they could stretch to in our experience, no open bridging was available from them. In todays' restricted lending market that simply isn't enough! Confirmation of sale via a solicitor is needed today to qualify as a "closed bridge", i.e. the deal is in the completion phase with just the paperwork to be completed.

Reasons for his state of affairs is that mortgage offers can be withdrawn at anytime right up to completion day or the lender can even stop lending! Of course in these circumstances there is another more serious question...

Do Open Bridging Loans Still Exist?

The answer to this question is a definite yes! The bridging market has had to respond to the deteriorating lending market and reduce "loan to values" to just below those typically offered in the mortgage marketplace. This is to ensure that long term finance can replace and exit the short term loan. Any bridging loan offer today will usually require all arrangement fees and interest to be deducted from any loan at the outset, leaving some applicants unable to proceed.

It's should be no surprise that the first question a bridging lender will ask even for an "open bridge" is "what is the exit route?". If the answer is through a sale or remortgage then the chances are that any offer will be lower than the lenders advertised LTV!

The point of this particular blog is this - if your cash requirement is anywhere near a lenders maximum LTV you are likely to be disappointed!

Submitted by Bridging Loan Broker on Tue, 10/02/2009 - 17:31 Syndicate content | Bridging Loan Feed

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