| Who 'Holds The Cards' When You Want A Bridging Loan? |
| Articles - Mortgage |
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It's fair to say that Warren Buffett can be described as a thoroughbred "money man". He has made billions of dollars in profits from his investments for close to 60 years.
It's fair to say that Warren Buffett can be described as a thoroughbred "money man". He has made billions of dollars in profits from his investments for close to 60 years. Yet when it comes to playing poker Warren Buffett is an extremely cautious individual, in spite of all his wealth and experience from his investment projects. Warren Buffett's attitude to poker is: "If you've been playing poker for 30 minutes and you still don't know who the patsy is, then it's you!" (The dictionary definition of a "patsy" is someone that is easily cheated or victimised.) If an experienced individual like Warren Buffett recognises that he does not hold all the cards, regardless of his past investment successes, then what should that tell a borrower about the strength of their position when they are seeking a bridging loan? For a decade (1997 to 2007) credit flowed freely, it was the borrowers not the lenders that held all the cards when it came to money. Projects were plentiful, financiers were in abundance. The capital markets were constantly seeking projects to fund and, in turn, this filtered to all levels of the economy, bridging loans included. Anyone with an ounce of experience could secure finance during this period. Whether it be a bridging loan, mortgage, secured loan it didn't matter, finance was relatively easy to come by. A borrower could walk into a lender, say their name, and if this carried any recognition, they would get funded. Just like magic! The capital and money markets though, have re-awakened a vital principle for us all which is: Cash is not supposed to be "as-easy-as-you-like" to obtain. Excuse the apparent flippancy of the above remark but after years of conditioning, that is precisely how borrowers have come to see bridging loans and other forms of finance.The onus should be on the borrower to show that they genuinely believe in their project; that it is viable; that the returns will materialise and that a decent profit will be made. The borrower also needs to show that they are prepared to assume a reasonable level of the risk in partnership with the lender. However, the problem occurs when the borrower thinks he is the one in the position of strength and he fails to show or prove any of this. But, once again, is it the Lender's money or the Borrower's? As silly as this question sounds, the borrower needs to understand that the lender is the one in the position of strength and of the two parties it is the borrower that is more likely to be the "patsy" (not literally, but you get the point). It may turn full circle in the future but right here, right now, that is where we are at. Whether it be a bridging loan or any other type of finance that you are looking for at the moment, then borrowers please recognise that you are not in the position of strength in the current market. Give a lender what he is looking for and, more than likely, you will get the bridging loan that you are looking for. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. More articles on bridging loans can be found at the Bridging Loan Direct website. With bridging finance advisers on hand, they will help you get the finance you are looking for. |