BRIDGING LOANS

Once   considered   as   only   a   niche   product,   short-term   lending   or   bridge   lending   has   seen   huge   year   on   year   growth   this   decade   due   to   the   flexibility and   quick   completion   times   these   loans   can   offer.   As   High   Street   Banks   have   suffered   liquidity   restrictions   and   tightened   their   criteria   new   lenders have entered the market offering a diverse and innovative range of products that have seen the market grow to an estimated £4Bn per annum. Bridging   loans   can   be   a   great   solution   for   clients   who   need   finance   quickly,   either   to   take   advantage   of   a   time   limited   opportunity   or   to   resolve   an emergency situation but for lenders that offer these loans they present a unique set of credit management challenges. Typically   written   over   periods   of   3-18   months,   the   key   components   to   a   successful   bridging   loan   are   a   suitable   asset,   acceptable   use   of   funds   and   of most relevance from a credit management perspective, a clearly defined and plausible redemption strategy, often referred to in bridging as the exit. The   interest   on   most   bridging   loans   is   charged   up   front,   built   into   the   gross   loan   advance   and   deducted   by   the   lender   at   the   point   of   completion.   As   a consequence   although   some   bridge   loans   offer   monthly   servicing   many   do   not   and   it’s   therefore   vital   that   lenders,   in   the   absence   of   regular   monthly contact to collect payments, maintain a rigorous focus on their post completion loan book. As   a   lender   we   have   always   believed   in   a   pro-active   relationship   with   our   borrowers,   one   where   we   maintain   regular   and   at   least   monthly   contact   to monitor   the   progress   on   their   redemption   plans.   Regular   interaction   of   this   type   maintains   borrower   awareness   of   the   short-term   nature   of   our   loans and   the   need   to   maintain   absolute   focus   on   the   redemption   process.   A   close   relationship   also   gives   us   maximum   visibility   at   all   times   on   any   potential problems and enables us to work pre-emptively with our borrowers to resolve these. During   the   processing   of   each   loan   request   we   build   a   strong   relationship   with   the   borrower(s)   and   as   soon   as   their   loan   completes   we   send   a   letter confirming   completion,   the   redemption   date   and   advising   them   that   we   will   be   liaising   regularly   throughout   the   loan   term   to   ensure   everything remains   on   target.   As   the   redemption   date   of   the   loan   approaches   we   increase   the   frequency   of   contact   reminding   the   borrower   of   both   their obligations and the penalties for late redemption. The   majority   of   our   loans   are   redeemed   by   the   sale   of   an   asset   and   in   such   cases   we   insert   a   specific   clause   into   the   loan   agreement   ensuring   that   the borrower   provides   us   with   a   monthly   report   from   their   marketing   agent   detailing   all   interest,   viewings   and   offers   made   on   the   property.   Once   a   sale has been agreed we ensure that the borrowers solicitor keeps us appraised of the conveyancing process relating to the sale. Of   course,   despite   all   the   measures   above   late   redemptions   do   occasionally   occur   but   by   this   stage   we   have   invariably   developed   such   a   close   and reciprocal   relationship   with   the   borrower   that   a   mutually   acceptable   solution   is   usually   found.   In   the   credit   management   of   bridging   loans,   as   with   so much in life, communication is key. John Clifford Managing Director Central Bridging

BESPOKE BRIDGING LOAN

& SHORT TERM LENDER

Central Bridging, Granary Wharf, Wharf Road, Burton on Trent, Staffordshire, DE14 1DU Tel: 03332 400 506   Email: enquiry@centralbridging.co.uk   Web: www.centralbridging.co.uk Central Bridging is a trading style of Central Bridging Loans Ltd. Registered in England & Wales | Company Registration Number 07728274. Central Bridging is not regulated by the Financial Conduct Authority (FCA). All loans arranged by Central Bridging are non regulated contracts as defined under The Financial Services and Markets (Regulated Activities) Order 2001 and the Financial Service and Markets Mortgage Credit Directive Order 2015. © Copyright Central Bridging Loans Limited Privacy Policy
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BRIDGING LOANS

BESPOKE BRIDGING LOAN

& SHORT TERM LENDER

Once    considered    as    only    a    niche    product,    short-term    lending    or bridge   lending   has   seen   huge   year   on   year   growth   this   decade   due   to the   flexibility   and   quick   completion   times   these   loans   can   offer.   As High   Street   Banks   have   suffered   liquidity   restrictions   and   tightened their   criteria   new   lenders   have   entered   the   market   offering   a   diverse and   innovative   range   of   products   that   have   seen   the   market   grow   to an estimated £4Bn per annum. Bridging   loans   can   be   a   great   solution   for   clients   who   need   finance quickly,   either   to   take   advantage   of   a   time   limited   opportunity   or   to resolve   an   emergency   situation   but   for   lenders   that   offer   these   loans they present a unique set of credit management challenges. Typically   written   over   periods   of   3-18   months,   the   key   components   to a    successful    bridging    loan    are    a    suitable    asset,    acceptable    use    of funds   and   of   most   relevance   from   a   credit   management   perspective, a   clearly   defined   and   plausible   redemption   strategy,   often   referred   to in bridging as the exit. The   interest   on   most   bridging   loans   is   charged   up   front,   built   into   the gross    loan    advance    and    deducted    by    the    lender    at    the    point    of completion.    As    a    consequence    although    some    bridge    loans    offer monthly   servicing   many   do   not   and   it’s   therefore   vital   that   lenders,   in the   absence   of   regular   monthly   contact   to   collect   payments,   maintain a rigorous focus on their post completion loan book. As   a   lender   we   have   always   believed   in   a   pro-active   relationship   with our   borrowers,   one   where   we   maintain   regular   and   at   least   monthly contact   to   monitor   the   progress   on   their   redemption   plans.   Regular interaction   of   this   type   maintains   borrower   awareness   of   the   short- term   nature   of   our   loans   and   the   need   to   maintain   absolute   focus   on the   redemption   process.   A   close   relationship   also   gives   us   maximum visibility   at   all   times   on   any   potential   problems   and   enables   us   to work pre-emptively with our borrowers to resolve these. During    the    processing    of    each    loan    request    we    build    a    strong relationship   with   the   borrower(s)   and   as   soon   as   their   loan   completes we    send    a    letter    confirming    completion,    the    redemption    date    and advising   them   that   we   will   be   liaising   regularly   throughout   the   loan term   to   ensure   everything   remains   on   target.   As   the   redemption   date of     the     loan     approaches     we     increase     the     frequency     of     contact reminding   the   borrower   of   both   their   obligations   and   the   penalties for late redemption. The   majority   of   our   loans   are   redeemed   by   the   sale   of   an   asset   and   in such    cases    we    insert    a    specific    clause    into    the    loan    agreement ensuring   that   the   borrower   provides   us   with   a   monthly   report   from their   marketing   agent   detailing   all   interest,   viewings   and   offers   made on   the   property.   Once   a   sale   has   been   agreed   we   ensure   that   the borrowers   solicitor   keeps   us   appraised   of   the   conveyancing   process relating to the sale. Of    course,    despite    all    the    measures    above    late    redemptions    do occasionally    occur    but    by    this    stage    we    have    invariably    developed such    a    close    and    reciprocal    relationship    with    the    borrower    that    a mutually     acceptable     solution     is     usually     found.     In     the     credit management      of      bridging      loans,      as      with      so      much      in      life, communication is key. John Clifford Managing Director Central Bridging
Central Bridging, Granary Wharf, Wharf Road, Burton on Trent, Staffordshire, DE14 1DU Tel: 03332 400 506  Email: enquiry@centralbridging.co.uk Web: www.centralbridging.co.uk Central Bridging is a trading style of Central Bridging Loans Ltd. Registered in England & Wales | Company Registration Number 07728274. Central Bridging is not regulated by the Financial Conduct Authority (FCA). All loans arranged by Central Bridging are non regulated contracts as defined under The Financial Services and Markets (Regulated Activities) Order 2001 and the Financial Service and Markets Mortgage Credit Directive Order 2015. © Copyright Central Bridging Loans Limited Privacy Policy
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