What happens if I can’t repay my Bridging Loan by the agreed time?
A bridging loan is like fire, it can make a great friend…….but a terrible enemy!
Failure to ask this important question could leave you with your fingers well and truly burnt.
As most non regulated bridging loans are “open”, meaning that there is no guaranteed exit strategy in place, sale or refinance is the usual method to repay, but this doesn’t always run as timely as customers think that it will. Two or three month overruns are quite common.
It’s therefore vital that when discussing your bridging finance needs with your Broker that the subject of over running the original bridge term is discussed. Each lender has a different way of dealing with late redemptions, however it inevitably means more costs and fees…so it’s vital to know what these are if a term extension is allowable.
In “A Professional Approach to Short Term Lending”, published by the Association of Bridging Professionals, it states:
“The important thing is to contact your mortgage lender as soon as possible to discuss your position. Affiliate lenders will look to reach sensible arrangements with you unless there are specific reasons why they cannot extend on your particular circumstances. Failure to make contact may reduce the willingness of the lender to try to assist you.
As we have commented so many times before, bridging is all in the exit, so consider yours very carefully and know what you are in for if matters don’t go “ exactly” as you had planned.