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laura122

Starting Bridging Finance Loan Company

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So I have a pretty large stash of cash in the bank and an opportunity has come up where I can lend from a company I run to another company secured on a property for a pretty generous interest rate

This is similar to a bridging finance loan - My solicitor has put together standard mortgage documents and personal gurarntees

I am lending 70% LTV

Does anyone know what the risks are here - It seems pretty risk less becuase in the event it is not paid the property is repossessed and auctioned.

Can someone help me see through this as my thinking is a bit muddy

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just do a law society check on your solicitor as the last few years a lot of them turned bad...the rest sounds ok if you know what you are doing....lets hope that who you are borrowing too and your sols do not go to the same lodge ect ect... :angry:

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If you don't understand the risks and are asking on an internet forum, you should really take a step back and look at yourself and ask why you are getting into this.

In terms of risks, you are exposed to the company you are lending to, the value of the property your loan is secured against (any nasties in the cupboard there? Have you got due diligence?) and any other priamry creditors of the company you are lending to -is yours a first / joint first /second mortgage.

Take some professional advice. An accountant as well as your solicitor.

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It seems pretty risk less becuase in the event it is not paid the property is repossessed and auctioned.

You haven't said whether this property is residencial or commercial... but. if it's residential, and someone has moved into it, are you 100% certain that you will have the power to repossess it, if there is a sitting tenant ?

Depending on which country the property is in, and the strengths of the tenant's laws, there might be rules preventing you booting someone out of their(well.. your) house.

Even if you took the legal route to kick them out, it could drag on for months or even years, with lots of legal fees.

By which time the property could be worth a lot less than it is now, so when you sell/auction it, you might not even get your loan back.

Like Sceptical said, I would pay for good advice on this one.. especially someone who knows property law in the country concerned.

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Guest sillybear2

Ensure you're not putting all your eggs in one basket. Also, why won't the banks lend to them on commercial terms, is there a reason?

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The risks are:

They go bankrupt.

They roll up the business and scarper.

They dont pay you back and you have to sell the debt onto someone else and you only get 5% back.

The risk is you loose all, or perhaps most of it, which is why you get a great interest rate

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So I have a pretty large stash of cash in the bank and an opportunity has come up where I can lend from a company I run to another company secured on a property for a pretty generous interest rate

This is similar to a bridging finance loan - My solicitor has put together standard mortgage documents and personal gurarntees

I am lending 70% LTV

Does anyone know what the risks are here - It seems pretty risk less becuase in the event it is not paid the property is repossessed and auctioned.

Can someone help me see through this as my thinking is a bit muddy

Have you any financial experience whatsoever ?

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You'd need a leverage ratio of at least 50-1 to compete with the high street lenders, plus, you can't wind up your losses into a some fancy derivative and still make profits.

And, without the experience and security of a city bus load of bankers and lawyers, you are going to get conned.

Invest outside of Britain if you have big cash sums while the pound is still relatively strong.

"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"

EDIT: If you are really coming onto the internet to flog your ideas and seek advice of strangers, well, I say full steam ahead as it is right bonkers.

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So I have a pretty large stash of cash in the bank and an opportunity has come up where I can lend from a company I run to another company secured on a property for a pretty generous interest rate

This is similar to a bridging finance loan - My solicitor has put together standard mortgage documents and personal gurarntees

I am lending 70% LTV

Does anyone know what the risks are here - It seems pretty risk less becuase in the event it is not paid the property is repossessed and auctioned.

Can someone help me see through this as my thinking is a bit muddy

Hi Laura,

I am in a similar position to you in that I have been considering starting a bridge finance company for some time now and the market for such finance appears to be healthy. If there is any help you can give me or if your would be interested in discussing working together on such a project I would very much like to hear from you.

BR,

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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