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CML in discussion with bridging finance providers

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by Gill Montia

The Council of Mortgage Lenders (CML) is investigating the possibility of setting up a trade body for bridging loan providers, in a move that could be seen as taking the sector closer to developing a code of conduct.

The CML is responding to growth in the bridging-finance market, which has traditionally been seen as providing a high risk solution to the successful completion of a property transaction.

Having met with market leaders, the Council is currently considering collecting data from providers, on the size of the bridging finance market.

The data could form part of an initial study to develop an industry-wide code of conduct for providers.

Such a move is likely to gain support from providers, as it would help improve the image of the sector.

Despite borrowers having widespread reservations about bridging finance, the CML believes that this kind of finance is useful in cases of a mismatch in timing between a property sale and purchase.

However, bridging loan interest rates can be high and borrowers are often faced with expensive entry and exit fees.

It is therefore important for both the loan provider and the borrower have a clear understanding of both the purpose of the loan and the exit strategy.

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News posted: October 16, 2007

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