littleoldlady
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Post by littleoldlady on Oct 17, 2016 6:54:05 GMT
Why are borrowers prepared to pay such a high rate of interest when LTVs are so low? Are they very bad credit risks? Are the valuations believable? Do lenders get told what the borrower intends to do with the money and how he intends to repay?
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SteveT
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Post by SteveT on Oct 17, 2016 7:22:51 GMT
Why are borrowers prepared to pay such a high rate of interest when LTVs are so low? Are they very bad credit risks? Are the valuations believable? Do lenders get told what the borrower intends to do with the money and how he intends to repay? These are short term residential bridging loans. Try asking your bank for a 6 month bridging loan on your own house, especially if there's already a 1st charge mortgage, and see the rates they quote you (however good your credit references).
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littleoldlady
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Post by littleoldlady on Oct 17, 2016 11:10:00 GMT
Why are borrowers prepared to pay such a high rate of interest when LTVs are so low? Are they very bad credit risks? Are the valuations believable? Do lenders get told what the borrower intends to do with the money and how he intends to repay? These are short term residential bridging loans. Try asking your bank for a 6 month bridging loan on your own house, especially if there's already a 1st charge mortgage, and see the rates they quote you (however good your credit references). Thanks, Steve. If they are bridging loans I assume that the borrower is moving from A to B and the loan will be repaid from the proceeds of selling A. Is that right? If so which is the asset over which there is a charge, A or B?
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SteveT
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Post by SteveT on Oct 17, 2016 11:30:07 GMT
The reasons for each loan vary widely and are explained in the loan summaries, as are the planned exit routes. Sometimes it's a straight bridge, to be repaid when the original house sells. Sometimes it's raising more capital against existing property for another purchase, which will then be refinanced longer term. Other times it's raising funds to repay a business loan. However the common factor tends to be raising short-term finance, quickly, secured against residential property.
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littleoldlady
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Post by littleoldlady on Oct 17, 2016 11:43:12 GMT
Thanks again. In these circumstances I don't know why the borrowers don't go to LI at a much lower rate.
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SteveT
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Post by SteveT on Oct 17, 2016 11:52:04 GMT
Thanks again. In these circumstances I don't know why the borrowers don't go to LI at a much lower rate. I don't know much about LI but a brief scan of their Residential Bridging Product Sheet suggest they won't lend as 2nd charge. Their other General Requirements are pretty exacting too so I guess LI's focus is lower risk loans at lower rates.
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pom
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Post by pom on Oct 17, 2016 12:45:19 GMT
I suspect LI may not like lending against the borrower's own home either, which at least a few of the BC properties are.
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