Bridging Loan
We are using 2 of our properties to secure a 64% LTV bridging loan with a commercial lender called Together Finance. We want to start relationships with the bridge loan companies and banks, and prove our capital adequacy and credit worthiness. So for now, we will pay the large interest rate (detailed below) and set up fees to get this reputation in place.
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Below here I detail the “deal” with more info for people we know and trust. Check out how to read it here.
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The deal we have secured is the best deal we can find, for 6 months the total cost is 13% or 0.13 per GBP borrowed. Obviously if we jump out of this deal earlier, then it will cost less.
Loan: £60,055
Cash received: £58,690
Rate: 1.2% pcm
Monthly repayment: £732.66
Setup Fees:
Arrangement: £1,175
Title Insurance: £500
Solicitors Costs: £600
TT Fee: £42
Checks: £18
All the fees are payable at the end of the term, including a 1 month interest exit fee if we exit the bridge in less than 12 months, which we plan to exit at 6 months, so this fee is calculated in the cost.
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The deal is taking longer than we would like due to a few things.
Company borrower:
Firstly if the borrower is a company as opposed to an individual, your legal costs could more than double. Lesson in this is to borrow in your own name if you can.
Unfortunately in our case, changing the borrower to us as individuals caused confusion as the lender’s solicitor did not reissue all the documents, and expected our solicitor to figure out which documents from the original set were still relevant. They clearly need a lesson in being pedantic (like some Malaysian lawyers we have dealt with).
This held the process up by several days.
Acceptable solicitors:
The finance company insisted that only a 3 partnered SRA (Solicitors Regulation Authority) registered firm represent us as borrowers. We checked with both solicitors who had acted for us previously and neither were qualified. We finally got a solicitor who was referred to us previously but never dealt with who could act, and this held the process up by a few more days.
Busy solicitor
We had to attend a few face to face meetings with our new solicitor, as she had to identify us properly and all paperwork had to be signed in front of her. When your solicitor doesn’t have time to look at the file in the first place, it makes it very hard to move quickly. We got to the office the second time to sign documents, however later found out that our solicitor had not understood the request, quite reasonably, and we had to go back.
We really had to push to get her attention the third time because we wanted to complete this matter asap, dealing with a very irate receptionist in the process (personally I think she needs to be schooled on what a service industry is), and ended up grabbing our solicitor between meetings on a busy day to sign the extra paperwork. We really appreciated her doing that, and understand we aren’t her only clients. We hung around to do this, missing another appointment we had just to save driving 5 more hours on another day to sign the extra paperwork.
The confusion over paperwork held the process up by several days, if not weeks.
Searches
Property searches like the chancel and environment search were required. We didn’t have the chancel search at all and only 1 environment search as the solicitor on that transaction had suggested it wasn’t necessary in his experience.
We took the initiative to organise the searches to ‘help’ our solicitor along and we were told to “stop interfering!” 😛
Jun & Craig Lambie
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