Alternative Means of Funding the Deposit – Bridging Loan
In case the purchaser has a related sale, he should be able to borrow the deposit from his bank on a short-term bridging loan. The banks are more than ready to give this type of loan because it is for a very short period. However, before lending the funds, the bank generally seeks for an undertaking from the borrower’s solicitors reassuring the repayment of the bridging loan from the net proceeds of the related sale. The terms and conditions of the undertaking should be considered carefully. The attorney should advise the purchaser that the bank would definitely charge an arrangement fee for the bridging loan. The borrower should also be informed that the bank would charge him high interest if he takes a bridging loan. Therefore, a bridging loan is always expensive.
