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CLOSED BRIDGING
Q&A
Q: What is closed bridging finance?
Closed bridging finance is loan equal to the
purchase price of the property, repaid by you
together with the bridging fee within 24 hours using
funds from a pre-arranged re-mortgage.
Q: What can I use the loan for?
The
bridging loan can only be used to purchase
investment property which must be located in England
or Wales.
Q. Why should I use closed bridging finance?
Closed bridging finance, for the right type of deal
(see next question!), enables you buy a property
without investing any of your own money (common
known as "no money down"), since we lend you the
full purchase price.
Q. What circumstances is closed bridging finance
most suitable for?
Closed bridging finance suits deals where the
purchase price is at least 15% below market value
(for a re-mortgage product that lends 85% of market
value) or at least 10% below market value (for a
re-mortgage product that lends 90% of market value).
We say "at least" because you'll need to allow
around 3-4% for buying costs.
Q: What are the fees?
We
charge 0.75% of the loan amount plus £100+VAT. The
£100+VAT is what we are charged by our solicitors to
cover the legal paperwork associated with arranging
the bridging loan, and we pass this on to you (sorry
about that!). So for a £100,000 purchase the fee
would be £867.50. If you use your own solicitor
there is an additional TT fee of £30+VAT.
Q: What is the process and what paperwork is
involved?
To
apply, simply fill in our online
application form. We will review your case and
discuss it with you if necessary. On approval
(normally within 24 hours assuming you have fully
completed the application form) we will inform our
solicitors who will send you a facility letter and
legal charge document (see
documentation section). You sign and return both of
these to our solicitors. We ear-mark the funds for
you on your estimated completion date. Our solicitor
and your solicitor will then liaise to finalise the
completion date and ensure our funds there. We need
48 hours notice from your solicitors to request
funds for completion.
Q. Do I need proof of income and a good credit
status?
No.
We loan the amount based on you having a
pre-arranged re-mortgage offer, therefore we do not
need to know your income or credit status.
Q. How can I have a re-mortgage offer before I have
purchased the property?
You
need to have a mortgage product from a lender that
allows simultaneous re-mortgaging (also known as
instant re-mortgaging or 24 hour re-mortgaging).
This means the lender is happy to re-mortgage a
property as soon as it has been purchased. Speak to
your broker about lenders and products that are
available for use with closed bridging finance and
allow simultaneous re-mortgaging. Our recommend
broker (see
partners page) as at 1st January 2008 had 8
lenders with products suitable for this type of
transaction. By far the most commonly used lender
amongst investors is Mortgage Express.
Q: If my re-mortgage offer is not enough to cover
the purchase price and fees can I still use your
closed bridging finance?
Yes, provided our solicitors have confirmation from
your solicitors that you have lodged funds to make
up the difference on completion.
Q. Do I have to use your recommend solicitors and
brokers?
No.
You are free to choose / use your own solicitor but
it is easier for us to help the deal through if you
use our recommended solicitor who also holds our
funds. The same applies for our recommended broker
and sellers solicitor. Why not give them a try? See
our
partners page.
Q. What about your free mentoring service?
Our
mentoring service is an opportunity for you to
discuss your deals with us and see if we can sort
out any problems you may have or things you are not
sure how to tackle. Obviously we cannot guarantee to
have all the answers but we'll do our best to find a
solution for you. Please note that we give priority
to existing clients who have a deal in progress.
Q. How do a find a below market value deal in the
first place?
We
are providing courses on how to buy property below
market value using little or no money down, and we
also offer a full personal tailored mentoring
package for the serious investor who wants to
develop their business. For further information
about our upcoming courses and our personal
mentoring service, please send us an
email with your contact details and we'll
provide you with information on our upcoming courses
and mentoring days.
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