Moving home can be stressful enough without the added stress of selling two properties rather than one. Finding your dream home can be a once-in-a-lifetime experience that few get the opportunity to enjoy. A couple looking to relocate to the coast had found the one, but time was of the essence. The clients had two properties on the market that they needed to sell in order to buy them; however, their dream property wouldn’t wait.

Afraid they were going to lose the house, the couple needed to find a way of becoming proceedable while they waited for a buyer to come along for theirs.

The clients approached UK Property Finance with their brief, and the team set about looking for a bridging loan that could secure the forever home. The current two properties owned by the couple could be used as security against the loan. A lender had been selected on the grounds that they required a comfort charge on the second property as the equity from both properties was needed for the exit of the bridging loan. Having a comfort charge instead of a standard charge on the second residential property reduced valuation fees and made the application quicker, particularly as the couple were keen to secure their next property so quickly. The couple had already exchanged contracts, which meant they were legally bound to timescales and risked losing their deposit if they did not complete them.

The team at UK Property Finance were told at the beginning about the tight deadline, which allowed them to prompt all parties to keep things moving. Successfully, UK Property Finance managed to complete the process a day ahead of schedule, allowing a day to move funds. Throughout the process, the clients were given regular updates, so they knew each milestone and knew we were achieving their target. The couple is now living their best lives in their new home, all thanks to our ability to find a lender with a market-leading rate not available from many other brokers with a comfort charge instead of a full charge on the exit.

If you would like to find out how UK property finance could do the same for you, then please email us at [email protected].

Clients often have challenging deadlines in unusual locations, and this case is no exception. In recent years, we have dealt with some fairly unique properties, but an old telephone exchange is certainly a first. On a wind-swept hill in Buxton, Derbyshire, our client was nearing completion, having already made the property wind- and water-tight. Unfortunately, due to the length of the task at hand, he had overrun the loan term agreed upon and consequently found the site being reposed by the bridging and development lender. Alarm bells certainly began to ring for the eager investor as the receiver was looking for an early auction sale to recoup the current lender’s loan. Our plucky investor felt this project could continue if he could get a resolution through UK Property Finance. The odds were greatly out of favour, and his good credit history faced being decimated because the loan had been given a personal guarantee for repayment. If it became public knowledge that this was now a repossession, the prospective profit gained would be eradicated by the achieved sale price and mounting costs.

The anxious investor knew where to turn with a phone call to UK Property Finance following a recommendation from a fellow developer. Understanding the depth of the issue over a lengthy conversation with our advisor highlighted the lack of equity in the project. Additional security was required to enable the buyback and complete the remaining work. Family can always be relied upon to send in the cavalry when the going gets tough. The clients’ sister managed to offer a lifeline with her residential home as security regardless of having a mortgage already against the property.

Grit and determination certainly paid off when we obtained a finance agreement in both names to repay the current bridging loan with a bridging loan secured via a first charge across the development site and a second charge on his sisters’ property. In dramatic fashion, the client managed to halt the auction, going ahead with the funds to complete the project. The pressure has subsided, meaning the client could focus on completing the project to maximise profits. His sister not only got to help her sibling in desperate times but also had the charge released from her property and a welcome financial bonus for her trouble.

The complexity of this case and the time scales bearing down meant UK Property Finance had to strategically and carefully select the ideal lender for this case. A fantastic result for everyone involved, and the investor lives to fight another day.

The UK’s’slternative finance industry is worth £4.6 billion, yet the majority of British property buyers are not aware of the many property purchasing options available to them. The majority of property buyers since 2007 have purchased their properties either through cash or mortgages. A survey carried out by the bridging lender has evidenced a lack of understanding or knowledge of alternative finance options available in the market.

Since 2007, 42% of properties sold have been to cash buyers, and 52% have used mortgages or remortgages. One in five homeowners has confirmed having used alternative finance such as unregulated loans, crowdfunding, and mezzanine finance towards the purchase of properties. Only 13% have used bridging finance, and this increases to 21% of second home buyers.

Due to the many options available in the market for finance or people’s lack of understanding or knowledge of these products, many home buyers have relied on a broker to help them find a financial product best suited to their needs. The lack of knowledge or understanding of other financial options has meant much reliance on mortgages and cash purchases. Research suggested that the buyers would have liked to have considered other financial products but feared that they might lose the property if they delayed making a credit decision. Nearly 50% of the researched group were not aware of or had a strong understanding of bridging loans or the situations in which these loans could be used.

The past decade has seen a rise in alternative finance options available to buyers or better suited to their needs, yet research demonstrates a lack of awareness or understanding about what these options are and how to use them.

It is important that buyers are aware of the financial products available to them so that they can make better-informed choices, placing them in a better position to purchase a property quickly and efficiently. There are many alternative finance options in the market, and to remain reliant on mortgages is restricting the ability of clients to get the funds they need.

This industry has seen prices become very competitive due to the entry of new specialised lenders, so it is ever more important to educate people on what’s available in the market so that they can make an informed decision before they invest.

Roughly summarised, non-status bridging loans refer to loans provided exclusively on the basis of collateral. The idea is that just as long as the borrower is able to provide sufficient security to cover the full cost of the loan, their past financial performance is unimportant. Instead, it’s simply a matter of determining their capacity to pay the loan back as required.

The term “status” is used in reference to the extent to which any given borrower can provide evidence to support their financial situation. In the most typical example, borrowers looking to obtain non-secured finance, such as conventional loans, are required to demonstrate how strong and stable their financial position is. As there is no collateral required for a personal loan, the lender must base their decision purely on the supporting evidence provided by the borrower.

Employment contracts, bank statements, and credit reports all combine to paint a picture of the borrower’s financial status.

Depending on the service provider you work with, it may be necessary to prove your financial status to a certain extent, though not quite at the same level as a typical unsecured loan. For example, if you’re only able to offer enough collateral to cover the cost of the loan, you may also be required to demonstrate your status. Though it’s comparatively rare, some lenders ask for collateral to be provided to secure the loan while at the same time carrying out credit checks.

In most instances, however, no additional evidence of status is required in order to apply for and successfully receive a secured loan.

The benefits of non-status bridging loans

Unsurprisingly, therefore, the biggest advantage of a non-status bridging loan is accessibility. Now, more than ever, it’s far too easy to blemish what may otherwise have been a relatively strong credit score. Even just a minor hiccup here and there can be enough to cause significant damage to anyone’s credit report. In such instances, you could then be looking at several years before once again qualifying for any kind of traditional, non-secured finance.

The primary difference with non-status bridging loans is the focus on the present and the future rather than the past. Those who specialise in non-status bridging loans are typically uninterested in the financial performance of the borrower up until the time they apply. Irrespective of how chequered their financial history may be, the only thing that matters is whether they can pay back the loan as required right now.

If they are able to secure the loan appropriately with sufficient collateral, nothing else matters.

Non-status bridging loans can therefore be great in instances where the borrower may be unable to qualify for any other kind of finance. Not to mention, when funding is required as quickly as possible, non-status bridging loans are typically paid out within a matter of days.

From unexpected business expenses to purchasing properties at auction to limited-time investment opportunities, non-status bridging loans can be worth their weight in gold at the right time and for the right borrower.

For more information on any aspect of non-status bridging loans, contact a member of the team at Bridgingloans.co.uk today.

Buying any kind of property at auction can be a daunting experience. Exciting certainly, but nonetheless a frantic process fraught with potential pitfalls.

On the plus side, get to know the process a little better ahead of time and you stand to enjoy a much smoother transaction.

So from the experts here at BridgingLoans.co.uk, here’s a quick rundown of a few essential tips for any buyer looking to pick up a property at auction:

• Carry Out Plenty of Research: First and foremost, you’ll need to invest the necessary time and effort in the research phase. Make sure you check out the specifics of not only the property, but also the area in which it is situated. An important question to ask yourself is whether you’d still be interested in the property, if it wasn’t available at a discount price. Question your motivation for buying the property heavily.
• Organise a Full Inspection: Even if you’ve hired something to take a look at things on your behalf, it’s still important to check out the property personally. Ideally, with an expert by your side to point out the kinds of things you might otherwise have missed. Don’t run the risk of encountering any nasty surprises at a later date.
• Study the Legal Pack: When a property is sold at auction, it’s usually accompanied by a legal pack. That being, all the legal admin and general paperwork surrounding both the property and the sale. If you yourself cannot make much sense of its complexities, you might want to have your lawyer inspect its details on your behalf.
• Sort Your Funding Ahead of Time: You need to ensure that if your bid is accepted, you have the required funds standing by and ready to hand over. If not, you risk losing the sale while you wait to get your hands on the money you need. Contact the team at BridgingLoans.co.uk at the earliest possible stage and we’ll let you know if you qualify and how the process works through our online bridging loan calculator.
• Consider Other Funding Options: Of course, bridging loans are not the only funding solutions available. Depending on your current circumstances, the nature of the property and its intended purpose, there are countless other secured funding avenues to explore. Again, contact our customer support team and we’ll walk you through the available options.
• Hire Help Strategically: In terms of both your legal advisor and financial service provider, it pays to be particular. Carry out plenty of research and hire the very best help you can lay your hands on. Don’t make the mistake of recruiting the first random name you come across that’s within your budget.
• Set a Strict Budget: Last but not least, don’t underestimate how easy it is to get caught up in the moment. Rather than letting your emotions on the day get the best of you, establish the maximum you can afford to spend and don’t spend a penny more. Don’t get into a bidding war that’s beyond your means, simply for the sake of it.

For more information on bridging loans or any aspect of purchasing a property at auction, contact the team at BridgingLoans.co.uk today.

Recent events, including the general election, a new coalition government, and an emergency budget, have all made the majority of mortgage and finance providers slightly nervous. Both residential and commercial buyers have found themselves in a position where they are unable to find a mortgage loan quickly and take advantage of a good deal. Bridging loans have traditionally been able to assist buyers who find they need to finance quickly, and the market for these products has grown, particularly for buyers at auction.

There have been a number of new products launched in the last few months, including some that offer a dual application for both the bridging loan and a longer-term mortgage. It is possible for landlords to arrange bridging finance that will cover up to 85% of the purchase price of a property, giving them time to refurbish or renovate the property as well as find a tenant. This type of borrowing eliminates the risk taken by many landlords who are buying at auction and using this form of short-term finance. Most would normally have to undertake the building and decorative work before being able to secure a traditional mortgage.

As both products will be underwritten by the same lender, the changeover and timeframe can be approved in advance, and borrowers have the security of knowing they will not be paying higher interest rates over the long term.
Rates currently available include a two-year fixed mortgage at 6.99% or a variable rate of 6%. Some products have no early repayment charges, and interest may be charged on a daily basis. It would seem that these products offer security combined with good value when compared with the regular buy-to-let mortgage market.

Some providers have reduced their interest rates and increased their loan-to-value lending criteria; other providers will probably follow suit shortly. A good broker will have all the relevant information.

Using a bridging loan to buy at an auction

The most common reason for using a bridging loan is when people are buying property at auction, although there are other equally valid reasons, for example, needing to secure a new property before the sale of an existing property has been completed.

It is a sad fact that over the last 18 months, the number of repossessions coming onto the market has increased. Many of these properties are put up for auction by the mortgage lender, and investors who have cash available for fees and deposits have taken advantage of these reduced-priced properties.

Financing a purchase from an auction can be difficult, as mainstream or traditional lenders do not have the flexibility to agree to an application and release the necessary funds without undertaking surveys and approving renovation plans. The time this takes will undoubtedly be longer than the terms agreed in the auction sale contract. When buying at auction, the contracts will be exchanged on the day, and completion will take between 14 and 28 days.

Raising the cash to purchase a property in need of some work can be frustrating and time-consuming. A bridging loan gives buyers the breathing space they need to undertake the necessary renovations and apply for a longer-term mortgage loan. This type of loan also means that potential bidders can attend the auction with the knowledge that funds will be available to complete the transaction.

Mathon Finance has gone into administration.

PFK Accountants have been appointed as the administrators of Mathon Finance and will be dealing with all creditors of the Glasgow-based bridging loan provider. Mathon Finance concentrated on commercial property and has been hit by the fall in value of business premises during the last two years.

The remaining assets have been sold to Juniper Property Finance Company, and it is hoped that jobs will be secured for employees.

The news means that potential customers who were dealing with the company will be glad to hear that other providers of bridging loans have said they will be pleased to work with new customers, and although the economic climate has been difficult, they believe that the market for bridging loans continues to be healthy.

£1.5 million in fraud prevented

Three men who approached Masthaven Bridging Finance for a £1.5 million bridging loan on a £5 million London property have been arrested after the company became suspicious of their identity. Passports and utility bills were provided by the men but proved to be counterfeits, and the police were called.

Summary

It would seem that bridging loan companies are weathering the economic storm by finding new products to offer and considering reducing their interest rates, loan-to-value criteria, and the possibility of a growing auction market. The financial situation across the UK is changing rapidly, and anyone interested in a bridging loan must do their research.