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  • FIRST POST
    • Spursman100
    • By Spursman100 11th May 18, 12:57 PM
    • 12Posts
    • 0Thanks
    Spursman100
    Investing
    • #1
    • 11th May 18, 12:57 PM
    Investing 11th May 18 at 12:57 PM
    Bridging finance
    Bridging loans are short-term loans used by property buyers who are expecting to get a mortgage from the bank but cannot wait for the approval. For example, a landlord might need to convert or refurbish a property for the rental market, but would not qualify for buy-to-let finance until after the work is done. As a private investor, you can invest in funds that pool bridging loans, in order to spread the risk across several borrowers. Itís a well established business, but the minimum investment in these funds is typically around £25,000.


    Has anyone got any experience with this?


    I am looking to either sell my property that I own with my brother or buy him out by remortgaging and renting it. option 2 is to sell and use the money and invest in bridging.


    I will have 85k to invest if I sell the property


    thoughts?
Page 1
    • lisyloo
    • By lisyloo 11th May 18, 1:01 PM
    • 21,833 Posts
    • 10,547 Thanks
    lisyloo
    • #2
    • 11th May 18, 1:01 PM
    • #2
    • 11th May 18, 1:01 PM
    Is the investment secured on property?
    Is it covered by the FSCS or any other compensation scheme?

    If not then you could lose the lot.
    Personally I'd rather have a diversified portfolio of funds as it spreads the risk.
    • El Torro
    • By El Torro 11th May 18, 1:21 PM
    • 286 Posts
    • 266 Thanks
    El Torro
    • #3
    • 11th May 18, 1:21 PM
    • #3
    • 11th May 18, 1:21 PM
    Looks like a form of peer to peer lending. Might give good returns but I wouldn't put too much of my investible wealth into it, certainly not more than 10%.
    • Spursman100
    • By Spursman100 11th May 18, 1:43 PM
    • 12 Posts
    • 0 Thanks
    Spursman100
    • #4
    • 11th May 18, 1:43 PM
    • #4
    • 11th May 18, 1:43 PM
    Is the investment secured on property?
    Is it covered by the FSCS or any other compensation scheme?

    If not then you could lose the lot.
    Personally I'd rather have a diversified portfolio of funds as it spreads the risk.
    Originally posted by lisyloo

    Yes its secured against the property. Only downside is if the person defaults you have to wait for your money.


    not sure what compensation scheme covers it, need to look into it more.
    • ChesterDog
    • By ChesterDog 11th May 18, 3:05 PM
    • 881 Posts
    • 1,642 Thanks
    ChesterDog
    • #5
    • 11th May 18, 3:05 PM
    • #5
    • 11th May 18, 3:05 PM
    I have three such investments currently.

    All three are in default.
    I am one of the Dogs of the Index.
    • Malthusian
    • By Malthusian 11th May 18, 3:09 PM
    • 4,072 Posts
    • 6,382 Thanks
    Malthusian
    • #6
    • 11th May 18, 3:09 PM
    • #6
    • 11th May 18, 3:09 PM
    Who is the borrower you are lending to, or the company arranging the bridging loan investment?
    • ChesterDog
    • By ChesterDog 11th May 18, 3:20 PM
    • 881 Posts
    • 1,642 Thanks
    ChesterDog
    • #7
    • 11th May 18, 3:20 PM
    • #7
    • 11th May 18, 3:20 PM
    Who is the borrower you are lending to, or the company arranging the bridging loan investment?
    Originally posted by Malthusian
    In my case, it's three borrowers via House Crowd.

    I don't generally touch these sorts of third party loans in that format, but sometimes there is a bit of a drought of the conventional buy-to-let investments.
    I am one of the Dogs of the Index.
    • Broken Biscuits
    • By Broken Biscuits 11th May 18, 3:27 PM
    • 345 Posts
    • 659 Thanks
    Broken Biscuits
    • #8
    • 11th May 18, 3:27 PM
    • #8
    • 11th May 18, 3:27 PM
    If you have not already found it, try reading here http://www.p2pindependentforum.com

    Yes the loans are often asset backed, but there is often a question mark over the valuations given.

    Lendy used to be the people!!!8217;s favourite but has fallen out of favour recently with a few defaults and bad valuations. Up until very recently collateral was very popular but a freeze on all accounts and going into administation put an end to that. Is moneything the new darling now?

    If you do your research and still want to invest it would be bad investing to put 85k in if that is your only investments. You would think that 85k in p2p would be ok if you had a total of 400k to 1mil invested across other investments. Eggs in baskets and all that.

    Personally I have at times had a few thousand in p2p but not so much currently. I was in the process of winding down when the collateral admin thing happened so am locked in until that gets resolved but have not had any defaults from them or any other platform. I think I might be one of the lucky few in that respect, where the strategy known as pass the parcel did work for me.

    Lots of risk associated with bridging or p2p and not really suitable for all your savings.

    Best Of luck though if you do decide to put some of your money in
    • Spursman100
    • By Spursman100 14th May 18, 1:40 PM
    • 12 Posts
    • 0 Thanks
    Spursman100
    • #9
    • 14th May 18, 1:40 PM
    • #9
    • 14th May 18, 1:40 PM
    Thanks for the replies, it was mentioned to me and I don't have enough time to educate myself on it. I think I will rent out my property as that seems as safer bet. Just hope I can get decent tenants in.
    • bowlhead99
    • By bowlhead99 14th May 18, 2:01 PM
    • 7,825 Posts
    • 14,292 Thanks
    bowlhead99
    Thanks for the replies, it was mentioned to me and I don't have enough time to educate myself on it. I think I will rent out my property as that seems as safer bet. Just hope I can get decent tenants in.
    Originally posted by Spursman100
    Plenty of info on tenancies etc on GM's thread as a starter here.

    https://forums.moneysavingexpert.com/showthread.php?t=5180214

    There are several threads on different aspects of landlording that you'll find within the house buying/renting/selling board. Don't stop until you've read every link on every link on every post.

    Being a landlord isn't without its responsibilities -it can be a minefield to those who aren't educated on property law and good business practices. So if you don't have plenty of time to educate yourself on stuff, don't be too quick to set up a small single-property letting business as a landlord. A smarter use of your funds can be to invest into other people's investment products.

    Lending at high interest rates for bridge finance on a property development that might fall through due to a declining property market or incompetence of the borrower, and hoping the borrower doesn't go bust, is one sort of thing that could be found under "other people's investment products" but it's by no means the only one, nor the safest if you're looking for a home for your cash.
    • jamei305
    • By jamei305 14th May 18, 2:22 PM
    • 327 Posts
    • 380 Thanks
    jamei305
    Bridging loans that are solely to facilitate a house move, where someone needs to buy a property before selling their current one are a well-established product offered by banks. John and Norma Major used one to buy their constituency house in Huntingdonshire for example.



    Where they are used for property development they tend to be a lot more risky, because there is far more uncertainty over the valuations of property developments than established family homes.
    • Broken Biscuits
    • By Broken Biscuits 15th May 18, 7:55 PM
    • 345 Posts
    • 659 Thanks
    Broken Biscuits
    Thanks for the replies, it was mentioned to me and I don't have enough time to educate myself on it. I think I will rent out my property as that seems as safer bet. Just hope I can get decent tenants in.
    Originally posted by Spursman100
    You could add landlord legal cover to more safeguard a rental. Some policies cover your rent if the tenants donít pay and cover legal fees to evict too. Worth looking into if you go down the LL route but want to reduce some risk.
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