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Money&Co to offer bridging loans
Money&Co have announved that they will be offering bridging loans between 6 and 12 months, joining the growing number of peer-to-peer platforms offering these types of loans.
Here is the email sent to lenders:
We are writing to tell you about a new lending opportunity that we will be offering you shortly. We have already started lending in the property sector and have recently funded two loans for WeBuyAnyHome.com as you know. We are now looking to add property bridging loans. These loans will be short term (6-12 months) and will have a fixed interest rate. The first one that we are working on is likely to have an annualised yield of 10%. The minimum term of the loan will be 6 months and the maximum term will be 12 months. The money will be lent to a property developer, who is purchasing a piece of land with outline planning permission for housing. He will then proceed to get full planning permission and, when this has been received, he will then be able to refinance the debt with a bank. The loan to value will be 80% against the independent valuation of the land with outline planning permission and interest will be rolled up for the first six months. If the debt is not refinanced at that point, then the borrower will service the loan for the following months until the monies are repaid. This means that lenders will receive no payments for the first six months, but will then receive interest payments in subsequent months. At the point of repayment, they will get the original capital back plus interest accrued over the first six months.
As the interest rate will be at a fixed rate, the auction process will be different. Lenders will offer to take pieces of the loan at the fixed rate and as soon as the full amount has been offered, the auction will close. Given that this is a new departure for Money&Co., we will arrange a lender call in the coming weeks so that you can ask any questions about how this type of loan will work.