Unfortunately some investors are falling prey to lenders that appear to offer very low interest rates to attract deals, but then escalate the rate as the deal progresses and take too long to provide the funds, says Positive Bridging Finance, a leading bridging finance broker.
Gross bridging in the final quarter of 2012 was £439m, 49 per cent more than the equivalent period in 2011. This has led to a flurry of new entrants who perhaps aren’t as equipped to deal with applications in the manner that bridging finance often requires, and are offering headline grabbing interest rates, which are not accessible for the majority of applicants.
Investors are also having to wait much longer than the industry standard of two weeks from initial application to receiving the funds which in some cases, is causing them to lose the deal.
John Waddicker, Managing Director of Positive Bridging Finance comments:
“It’s unfortunate that investors are being wooed by very low interest rates which look attractive at the outset, but are unachievable for many. Whether that is due to the location or size of the property being purchased, the loan to value required or the credit profile of the applicant, we find most applicants do not qualify for the rates advertised by some lenders.
“Bridging loans are often required in a short space of time. Some lenders are more institutionalised with “tiers” of underwriters and this slows up the whole process.
This could mean precious days are lost and there is potential that the deal could be lost to another buyer with a more proactive lender.”
