How does a Bridge Loan workWhat does a Bridge Loan do?
Whereas the buying and selling of real estate underpins many a bridge loan, there are a number of factors that may require short-term cash. United Trust Bank's 2014 housing portfolios, for example, were developed to allow the borrowers to land their own homes in order to offer long-term financing opportunities.
Further uses are when the title to an acquired real estate needs to be redeveloped or when a recently purchased real estate needs to be redeveloped before a long-term loan can be granted. An often ignored point is that the real estate that is the object of the bridge loan is not the only collateral provided or even a collateral.
Title to the collateral object(s) can also be variable and many also need to be restructured. But before we look at this and the unique nature of each request, here is an example of a more uncommon use of a bridge loan. We had a secure building consisting of two apartments.
There was one empty apartment and one inhabited by a sitting lessee. It was a very good offer and we were able to help the seller of the real estate, the seated lessee and our debtors reach their targets. It is one of the pleasures of working in credit bridge business that each case is its own history with its own unique characteristics.
Cannot be emphasised enough that these credits are not suitable for an automatic or activated credit line. It should allow the creditor to make available on the same date and almost certainly on the next business day either a DIP or a set of suggested words - the vocabulary of which may vary slightly from creditor to creditor.
A good lender knows how to organize a loan, and our past experiences have shown us that the best way to do this is either over the telephone or in a personal conversation with the borrowers, the importer and sometimes their professionals. After a few month, however, our clients opted to live in their leased home and decide to stay instead of moving to London as initially foreseen.
Borrower were asked to a meeting at our office the following Monday and a bank official paid a visit to the London office on Tuesday. Loan was drawn on Wednesday, less than 3 working days after receipt of the first request. In the case of bridge credits, the evaluations can be initiated more or less immediately so that they take place very quickly.
It is another example of the credit processing that takes place according to the borrowers' needs and not the lenders'! Whilst most creditors will have a group of appraisers where there is a chance of default and/or the value of the real estate is particularly high, the better creditors will try to find an appraiser who can quickly inspect the real estate and has appropriate fees.
As far as the laws are concerned, a major distinction is that the overwhelming rule of law requires separated representations of their borrowers, i.e. the bridge creditors do not allow their lawyers to act for their borrowers or the other way round. The reason for this is that the creditor must be completely certain that the debtor is fully conscious of the effects of concluding the credit contract.
A further distinction to the texts of the law is that the lawyers of the bypassing creditors are far more than a legitimate POX. The lawyers of UTB's Bridge Department are committed because they are able to provide proactive support to the borrower's lawyers and help implement the business. Even many bypassing creditors use titular cover for many, if not most, cases.
You wanted to buy a similar real estate with short-term financing and use both objects as collateral for the financing of the sale. Judicial due-diligence was impressive and included several attorneys at the bank's attorneys and eventually at several other law offices as the bank's loan was part of a larger bank and financing operation.
Mortgages are paid back through long-term credit lines similar to those our client has already received for other entities. Temporary bridge credits can be an interesting, interesting and sometimes provocative special commodity for real estate agents that they have in their armory. While bridge credits clearly continue to be a relatively small corner of credit, there are beneficiaries for whom a short-term bridge loan is appropriate, and this has allowed the UTB Bridge Department and our broking partner to flourish.