John Maclean is managing director of Link Lending
“Given the short time limits, bridging finance would be the obvious choice as most providers of bridging loans are able to act quickly and release funds at very short notice, as long as the customer’s needs can be met within their criteria.
In our experience, top priority for the broker must be to question the applicant carefully and submit a clear explanation of the situation, anticipating everything that the lender might wish to know, along with the application. The documentation required by the lender can be scanned and e-mailed, which would also help with a speedy turnaround.
!We can lend up to 85 per cent loan-to-value (LTV) on residential purchases, which would cover the sum needed, have no minimum loan term or early repayment charges, so interest on the bridging loan will only be payable for the period it remains outstanding – even if this is just a few days.”
Tony Cardiff is sales director at Alexander Hall
“If contracts have been exchanged, the terms of the contract will have established the liability for each party in the event that one of them is unable to complete on time. Assuming a standard Law Society contract has been used, then the penalty interest payable would work out at something like 4 per cent above Bank Base Rate on the balance of the transaction, i.e. the purchase price, excluding the deposit, already paid.
"Poppy should make a point of asking for an explanation from her solicitor as to why this problem has come to light so late in the day. If she or her solicitor is at fault, then, depending on the terms of the contract, she could become liable for penalty interest on any other connected purchases.
"Bridging finance is available for situations like this, but in practice it is unlikely to be cost-effective for such a short delay.”
Jon Harris is associate director at Savills Private Finance
“If Poppy can’t raise £357,000 within the next 24 hours, she will miss out on the property and lose her deposit.
"Normally, I’d recommend liaising with the vendor in an attempt to extend the deadline and paying penalty interest until completion is possible. This would allow sufficient time to secure an alternative offer.
"Failing this, a broker can use the existing valuation to save time, and may seek bridging finance, which although not cheap, would allow the original completion date to be met.
"A simultaneous application for an alternative mortgage should be made and the loan switched across as soon as possible. Normally the bridging firm will require evidence of another mortgage before agreeing finance, but based on the LTV, this might be waived if an agreement-in-principle is in place.”
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