Latest Debt News
100% bridging loans 'too risky'
10/07/2008 17:37:00
Due to the slowing property market, bridging loans which cover the entire value of a property are "too risky" for borrowers and lenders alike, according to a source.
The comment from Savills Private Finance shows how 100 per cent bridging loans are unlikely to be popular among borrowers or lenders because of the unpredictable nature of property valuations at present.
With house prices as they are, Savills says borrowers need to understand what they are paying and what their chosen property is really worth.
The company advised borrowers could be left with an expensive and unaffordable loan in the event they are unable to sell off the respective property quickly, which is what the loans are designed for.
Melanie Bien, a director at the company, said: "I would have thought now is possibly the worst market in which to have this sort of product. I would think that most borrowers would be cautious as well."
Bridging loans, such as the Underbridge product launched by Tiuta last week, are designed specifically for auctioned, repossessed or distressed properties which investors want to sell on later down the line.
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