Home » Frequently Asked Questions
Everything you Need to Know About our Bridging Loans
1. How can I apply of a loan?
Applying for a loan is simple, quick and easy. The main steps are as follows:
- Call or send us an email with your scenario
- Receive Indicative Offer
- Property Inspection & Application
- Loan Assessment
- Receive Formal Offer
- Solicitors Instructed
- Get funded
2. Who can apply for a bridging loan?
- Companies, Trusts (Corporate Trustees) & Individuals
- For Any Business or Investment Purpose – NO NCCP Loans
3. Once I apply, how long does it take to process?
We can general settle loans within 72 hours.
Settlement timeframes from time to time do get pushed out by factors beyond our control which relate to outstanding information required to support an applications or solicitor availability.
What if my case is urgent? Do you offer a fast track service?
If your case is urgent and you need a fast settlement, please advise us of your deadline date so we will then offer you a fast track service.
4. How long can I borrow the money for?
As a short-term loan, they are generally taken out for 1 to 6 months, but can be for up to 12 months where applicable.
5. What are your fees and charges?
Our fees & charges consist of the following:
Upfront Property Inspection & Valuation Fee
- Inspection fee is payable upfront by the borrower;
- Inspection fee is non-refundable if the loan is declined or doesn’t proceed forward for any reason;
- Typically, the upfront inspection fee is $3,000 to $5,000, but may differ depending on location and number of properties.
- A quote will be provided to the borrower confirming these details.
Application Fee
- Application fees are charged on all loans and will be quoted to you in your Letter of Offer;
- Application fees will be deducted from your loan in most case;
- Application fees are range between 1% to 3% of the loan amount plus GST;
Legal Fees & Government Charges
- Legal work is provided by a third-party service provider and as such we do not control the charge out rates of the solicitors;
- As each loan is unique in nature, it’s difficult gauge the cost for legal fees as they are not always one size fits all;
- We can provide you with a quote for the legal fees & government charges prior to signing a Letter of Offer;
Legal fees can be deducted (or added) to your loan (depending your preference and if it fits within the LVR guidelines);
6. Are there any extra fees & charges?
Roll Over Fees
- Roll Over fees are charged if you wish to extend your loan term for an additional period;
Discharge Fees
- When discharging your loan, you will be charged a discharge fee for the solicitors to prepare the necessary paperwork;
Management Compliance Fees
- May apply from .75% of loan amount for compliance
7. Are there any early repayment fees?
There are no fees or penalties for paying out your loan earlier than the scheduled period.
8. What security does Bridging Finance Crowd take over loans?
Bridging Finance Crowd take the following forms of security over loans:
- A legal charge placed on all properties being taken as security.
- A debenture providing a floating charge over the business’ assets including stock, debtors, cash and any fixed assets that are not currently charged to another lender.
- A personal guarantee from the directors or partners in a business, or a company guarantee from a related company.
We will lend against the following types of properties:
- Residential
- Commercial
- Industrial
- Land
- Special Purpose Assets
The amount of security offered proportionately reduces the risk for the investor, which in turn reduces the level of interest they are seeking on the loan.
9. Why don’t borrowers go to the banks?
The appetite of banks for risk has reduced significantly over the years and this means they have tightened their lending criteria.
Banks are heavily regulated and enforce strict lending policies across the board. This inflexibility leaves many borrowers out in the cold with funding proposals being declined.
As an asset lender, Bridging Finance Crowd is more flexible with its approach and can use judgement as to whether proposals are worthy of support, despite the fact they may not fully meet a bank’s lending criteria.
10. What types of loans do you provide?
We provide short term bridging loans via either a FIRST or SECOND mortgage.
11. What are the loan amounts you offer?
We provide the following loan amounts:
- 1st Mortgage Loans From - $250,000 to $5,000,000+
- 2nd Mortgages Loans from- $50,000 to $500,000
12. What is maximum loan to value (LVR) ratio you offer?
There is no hard and fast rule as each deal is assessed on its merits. However, as a guide:
- Up to 75% LVR for Residential
- Up to 70% LVR for Commercial
- Up to 65% LVR for Industrial
- Up to 60% LVR for Land
13. What are your interest rates?
There is no hard and fast rule as each deal is assessed on its merits. However, as a guide:
- Starting from 5% per month for 1st Mortgage Loans
- Starting from 2.5% per month for 2nd Mortgage Loans
14. What do you mean by an Inspection?
An inspection is simply the same as a valuation, which is conducted by our CEO. We provide the personal touch, we like to visit every property we lend on and meet everyone we lend to. This is first steps in assisting us determine the value of your property being issued as security for your loan.
15. What if the valuation is lower than anticipated?
Where the valuation is lower than expected, we will still offer the loan, but may reduce the amount accordingly within our loan to value (LVR) guidelines.
Alternatively, additional property can be provided as security.
16. How long does it take to settle a loan?
We can settle a loan within 72 hours.
But the speed depends on the availability of data from the client to support their application and the speed of borrower’s solicitors in completing the sign up of your loan mortgage documents.
What if my case is urgent? Do you offer a fast track service?
If your case is urgent and you need a quick completion, please advise your broker or case handler as to the deadline date and the reason why, we will then be able to offer a fast track service.
17. What is an exit strategy?
An exit strategy is your plan on how you wish to repay the loan. Each loan will require at least one exit strategy.The most common repayment methods are:
- Sale of the Security held or Another Property;
- Refinance of a property;
- Business Sale;
- Tax Rebate / Sale of Shares;
18. Do you lend to people with adverse credit?
Yes.
Often people seek a bridging loan as they have defaulted on their financial commitments and thus have adverse credit. A bridging loan can be a good tool to help alleviate the financial pressure and allow clients the time and flexibility to return to a stable footing again and improve their credit.
19. What can I use the money for?
You can use the loans for any purpose… here’s a short list;
- Need Access Funds Fast
- You’ve been Declined by a Bank
- You Have No Financials and Need an Asset Lend
- Solve Business Cash Flow Requirements
- Paying ATO Tax Liabilities Quickly
- Divorce Settlements
- Property Renovation
- You’ve Run out of Money to Complete a Construction Project
- Property Sold, But Not Settled & Need Deposit for Another Property purchase
- Property Sold, But Not Settled & Need Funds to Settle New Property that You’ve Purchased
- Subdivision of Property
- Paying off Arrears to Bring Your Existing Loan Up to Date
- Require a Loan Where Interest is Not Serviced Monthly
- Stopping Bankruptcy & Insolvency Requirements
20. What if I struggle to pay the loan back?
We will work with you. We will allow a loan extension should it be required to give you time to complete a refinance or sell a property.
If you repeatedly fail to repay the loan, and after an extension you still show no signs of reasonably being able to repay the loan, then your security could be at risk of re-possession. However, this measure will only be used in a last resort and we will work with you to find a suitable payment plan.
21. Do you do regulate bridging loans?
No – we do not do regulated loans.
22. Do I need to use a solicitor?
Yes, you will need a solicitor to provide you advise when taking a bridging loan.
We would recommend using a solicitor who has experience in completing bridging loans so that the process is completed quickly.
23. What is the risk?
Bridging finance is short term finance so it is more expensive than mainstream finance. Because of this, it is vital to have an exit strategy in place to ensure you can repay the loan should anything unfortunate happen. If a loan cannot be repaid, it is liable to be repossessed, and high interest rates will be charged, so being able to refinance or sell the property should always be an option.
24. What happens if I don't need the money quite yet?
Just let us know. We recommend getting all your ducks in a row first. For example, it would be wise to get the inspection carried out and lock the investors’ funds in so that you can draw the loan down whenever you need it.
25. How can I pay interest?
You can opt to prepay the interest upfront, service the interest monthly or you can capitalise the interest and pay it back at the end of the loan term.
The interest rate is a fixed figure displayed monthly.
26. What happens if I miss a repayment?
If you think you will miss a repayment, it is best to call us and inform us when you intend to make the repayment. General we offer borrowers a grace period of 3-days where for late payments where default interest is not charged and no other fees are incurred.
27. What is a default?
A default is the failure to meet the legal obligations of a loan. Simply meaning the borrower has failed to make a mortgage repayment when it falls due. If a loan is in default, the borrower will generally incur a higher interest rate as a penalty.
28. How much commission does my broker get paid?
Bridging Finance Crowd does not factor commissions into loans for brokers or introducing parties.
29. How does my broker get paid?
Brokers need to come to an arrangement with the borrower and have a mandate or agreement signed to receive commission payments at settlement for the work they provide in facilitating a loan on behalf of a client.
Each deal varies, but generally as a guide a broker will charge somewhere between 1%-2% of the loan amount plus GST as their commission. This fees is then paid to them on drawdown of the loan.
