Mike Pendergast is an IFA at Zen Financial Services
“Depending on Philip’s relationship with his bankers, he could approach them for a short-term loan or overdraft, but this would depend on whether he had funds to go towards the amount required, as business banks tend to require a contribution from the borrower. Depending on his own situation he could raise the funds via his mortgage, as long as he had sufficient equity and was happy to use it for this purpose. If he chooses this route, he should go for a rate with no early redemption penalty, as this would allow him to repay the funds in three months without incurring any interest or early repayment charges (ERCs). Alternatively, he could go for a secured loan or investigate whether any government agencies could assist with short-term finance.”
John Maclean is managing director of Link Lending Limited
“Given the short-term nature of the proposed loan, then a bridging loan is an obvious option to look at. We don’t know how much Philip’s house is worth or how much he owes on it, but average prices in the North West region have risen in the last five years from £110,000 to £230,000, so it’s likely that there is enough equity to cover the £60,000 loan.
Using these average prices, the loan would be 25 per cent loan-to-value (LTV), so we could offer a rate of 0.75 per cent per month, with no ERCs or exit fees and legal fees charged at a flat rate rather than the sliding scale. Interest is calculated daily and can be rolled into the loan. This would make a bridging product a better choice than a secured loan which would almost certainly have ERCs attached.”
Alan Lakey is senior partner at Highclere Financial Services
“The level of equity in Philip’s property is crucial to his raising the funds. I’m assuming affordability is not an issue. Ordinarily I’d be looking for the most cost-effective answer, but Philip requires the funds quickly. The quickest route is likely to be his bank using a temporarily extended overdraft or short-term loan. If this is not feasible then a second charge loan may be possible. If not, then it is possible to arrange a remortgage. If so, he must use a lender which will not impose an ERC, although the main focus must be on a speedy offer. I would consider TMB, which offers online processing and a rate of 5.89 per cent discounted without penalty or any legal or application fees – only a valuation fee is payable. Presented sensibly, this should result in a quick offer.”
