A specialist bridging packager recently arranged a case that allowed a first; the client’s valuations and legal fees to be paid for, in the first instance, by the lender.
Scotland-based packager iBridging, received an application for a £100,000 loan from a customer desperate to prevent repossession of their family home – a farmhouse that has been in the family for generations.
The applicant owned unencumbered farmland in the North of England, but couldn’t fund the necessary legal fees and valuations, which would have likely amounted to £1-2,000.
Steven McColl, investment partner of iBridging, explains: “In normal circumstances this would be a complete ‘no go’, however, I spoke with one of my private funders and was able to place the deal on 'no ingoing fee' basis, meaning that the client did not have to pay for survey of legal fees in advance.”
“Needless to say the client was delighted, with funds released and a nasty repossession staved off.”
This is the first time the packager has placed such a deal, but stresses that it is just one example of a new wave of deals requiring ‘a bit more creativity’.
“It is on this note that we are working hard to bring new thinking to cases that would normally be declined,” says Mr McColl.
“In this credit crunched era, where we are seeing more and more people asset-rich but 100% cash-poor, I think there is going to be an ever greater demand for funding that can take a holistic look at a deal, and structure terms and incentives to proceed with the deal accordingly.
“We are finding that borrowers do not mind paying a higher rate, if the deal is structured in a way that does not strangle it in advance due to high ingoing cost,” adds Mr McColl.
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