Established in 1995, the company concentrates on bridging loans or short-term finance but also offers building and contents insurance products in the specialist landlord and commercial business sectors. The Cheval Group includes Cheval Bridging Finance Ltd., Cheval Commercial Finance Ltd., and Cheval Finance Ltd. Their pedigree is very high; all are regulated by the Financial Services Authority (FSA), and they also hold a licence to enter into consumer credit agreements.

Cheval was the first provider of bridging finance to become a member of the Council of Mortgage Lenders (CML) and was a founding member of the Association of short-term lenders.

Cheval has won two awards so far this year, most recently the 2010 Bridging Lender of the Year at the Bridging and Commercial Awards, for the second year running. It was also chosen for Best Service at the Moneyfacts Awards 2010.

Cheval has a reputation for providing fast, flexible, and reliable services. Following the announcement that they had again won the Bridging Lender of the Year Award, brokers came forward to praise and describe their experience using the company. Stories of superfast approvals and speedy release of funds, as well as a flexible approach towards applications that may have been turned down by other lenders, have all emerged.

Broker John Charcoal believe that Cheval offers an ‘easy and approachable nature’ that includes telephone contact with members of staff at all levels who respond to queries efficiently and quickly.

Interest rates from Cheval compare very well with those of other short-term loan providers, remaining competitive in a growing market. A spokesperson from Lifetime Mortgages and Finance said the group offers “good levels of flexibility in their lending approach and competitive interest rates. “They stand at the forefront of their profession.”

The group has worked hard to build good relationships with brokers and takes time to explain the products that it provides. This summer, they have been holding roadshows across the country to explain the best practices and appropriate use of both residential and commercial bridging loans. These kinds of products are complicated and have huge implications for anyone who is considering an application.

The roadshows have been very well received, and most brokers have admitted that prior to attending the presentations, they had very limited knowledge of the circumstances under which bridging loans should be used or when other products should be recommended.

The biggest client groups for bridging finance products are investors and residential buyers who are buying at auctions. In these situations, the buyer needs to complete the deal within a very short period of time, and it is often impossible to arrange a mortgage from a traditional lender quickly. The need for surveys and valuations delays the mortgage application process and could be the difference between losing or closing the deal.

Home buyers who are selling their existing home and need to complete a purchase on a new property before their own sale has gone through may also take advantage of a bridging loan to ensure that they do not lose their ideal new home. It is always recommended that customers take independent advice before taking out these high-cost products, and a well-informed mortgage broker will be able to explain the full implications as well as recommend an appropriate loan.

New products that have been launched take into account the period often now required by traditional lenders that the owner should have been in possession of the property for a minimum period of six months. Bridging loan customers can now arrange a loan that is geared toward a six-month plus agreement period with slightly lower interest rates than would traditionally have been charged by bridging finance companies. Cheval has a number of products suitable for a variety of clients and circumstances; ask your broker to find the right deal for you.

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.