UK Property Finance has today completed one of its largest bridging loans to date. The multi-million-pound funding was required to purchase a large repossessed new-built office block complex in the centre of a major UK city. Our client, a recently formed offshore limited company, had a successful bid for the property at auction some 2 weeks prior to our contact and managed to purchase it at less than 1/3 of the marketed asking price being requested prior to the property being repossessed.

Since paying the required 10% deposit, our client has come to realise that he had been strung along for 2 weeks by his long-term and previously trusted mortgage broker, who was unable to locate the balance of the funds needed to complete the purchase in the 28-day time frame required, despite being so confident at the beginning that he could do so. Our client now understood that he needed focused and specialist help to prevent a default on the purchase agreement, a possible loss of his deposit, and, more importantly, a loss of his bargain property.

A trusted family business acquaintance, bridgingloans.co.uk, had been recommended to our client due to our no-nonsense reputation of being open and honest at all times and always doing the utmost to do what we say. After an initial telephone conversation, we located a lender who agreed to supply the funds required for the purchase in the timeframe needed and at an excellent rate, which was much lower than what our client had been quoted previously and seen advertised elsewhere. We emailed the basics of the deal back to our client, including details of a substantial discount we had managed to negotiate in the arrangement fee, and as such, the client subsequently gave us the authority to act on his behalf.

To get the best possible rate, we advised the client to secure the purchase funds required against other owned property rather than the office complex. Our client had a large portfolio of prime central London residential investments, which would be more interesting to a wider range of lenders and would give us more choice and ability to negotiate the best possible deal with the lowest fees, etc. We secured a first charge on one property and a second charge on another.

We completed all the paperwork required to transact the case and emailed this to the client. Due to the tight time frame, the client immediately completed the paperwork, emailed it back, and on the same day, we forwarded this emailed paperwork to the lender, who at the same time instructed the valuations. As the reputation and standing of bridgingloans.co.uk are so strong, the lender was able to process the case through to offer by using the emailed documents only. The case was completed just in time, and although one issue occurred during processing, we used our high-level contacts within the lender organisation to ensure that the problem was quickly and efficiently dealt with.

We will be arranging the long-term commercial mortgage finance for the client so he can repay the bridging finance as required, and also because of the performance of our team at UK Property Finance, we have been asked to look at two more bridging loan projects for the client.

UK Property Finance has again surpassed forecasted targets in October and November 2014, mainly due to the number of small bridging loan completions during the months.

The firm uses the term “small” to describe loans between £10,000 and £50,000. This size of bridging finance is less popular with other bridge lenders and brokers, who tend to shy away in favour of larger loans. In fact, the lowest net-value bridging loan is usually £40,000, and many lenders require a much higher minimum net loan.

The average loan size of the small bridging loans arranged by UK Property Finance for the stated period was just under £18,000, and the average completion time was 8 working days from initial discussions to funding. The company does all the legal work on these types of loans internally, so there is a two-fold saving: no additional solicitor costs for the client, and just as importantly, this has vastly improved the completion time way beyond that which most other companies offering the same product could ever achieve. On several of the completed loans, we even managed to add a second charge to the property without needing to wait for permission from the first charge lender to be able to do so. This once again was a valuable time-saving tool for all of our clients.

Small bridging loans are available as a first charge on unregulated property or land, such as buy-to-let houses, commercial units, or land, with or without planning permission. They are also available as second charges on the same types of security and additionally on personal residential properties where the requirement for the money is mainly for business purposes or where each applicant is classified as having a high net worth and earning over £150,000 per annum.

Applications are acceptable whether the client has credit issues or not, and also if the client has or does not have income proof. The underwriting is quick, efficient, and kept to an absolute minimum so that all cases are funded within the shortest possible time frame and with the least possible fuss. Small bridging loans are available in England, Scotland, and Wales. As of yet, the only coverage we have in Northern Ireland is for larger loans starting at £50,000, but watch this space.

UK Property Finance is happy to announce that we have today completed the arrangements to fund a third-charge bridging loan of £200,000 plus interest, etc. on a client’s main residential property. The money was used to urgently purchase the office premises where his business had been trading for many years and was about to be sold to a competitor.

The residential security property in South London was valued at over £3 million and had a high street first charge mortgage of £300,000 with an excellent base rate tracker. The £ 250,000-second charge loan was from an asset finance company and was also on an excellent rate for a second charge in the region of 4% per annum. The client urgently needed £200,000 extra but, for obvious reasons, did not want to repay either his first or second charge with a higher-rate loan.

The client was a UK national but spent the bulk of his time outside the UK as a non-resident, and due to the nature of his business, income proof for traditional finance such as a mortgage or remortgage was not possible. The only finance option remaining that we could arrange was a third (3rd) charge-bridging loan.

Anyone involved in bridging finance knows of the rarity of such a product; however, bridgingloans.co.uk managed to arrange this for the client at an interest rate similar to that obtainable from most second-charge lenders.

Further complexity arose when we discovered that the client could not travel back to the UK to finalise the funding due to a medical condition. Bridgingloans.co.uk managed to locate a solicitor who had offices in both the UK and the client’s current residential location and who had the insurance required to guarantee the relevant money laundering checks, etc. required on the client whilst outside the UK. A Skype conversation also took place to complete the deal and fund the project in just over 5 days from initial contact.

The client is over the moon with how ukpropertyfinance.co.uk managed to resolve his urgent funding needs.

Following the change in regulatory body from the Consumer Credit Act (CCA) to the Financial Conduct Authority (FCA), confusion still surrounds what is and is not an FCA-regulated second charge, second legal mortgage or loan, or bridging loan on a client’s main residence.

Due to the change in requirements, it has also become increasingly difficult to locate a lender who is willing to fund these types of second-charge loans, as many lenders are not able to accept the increased supervision and constraints (such as not being able to charge a valuation fee) and, as such, have decided to completely withdraw from this sector of the market. Potentially, the FCA now regulates all second-charge loans over £25,000 that are secured on an applicant’s own home. All loans of less than £25,000 are automatically regulated.

The few exemptions on loans over £25,000 are as follows:

• If the majority (over 50%) of the loan is to be used for business purposes, The business uses will often need to be fully documented, as it will not be enough for a borrower to say that the loan is for business purposes. Examples of business uses can be related to BTL or investment property purchases, commercial property issues such as investment into the premises or purchasing the freehold, cash flow problems, purchasing stock and machinery, business start-ups, company debts, end-of-year tax payments, etc. (providing this is not a personal debt). Business borrowing is available to individuals, sole traders, or limited company directors.
• If the client is a high-net-worth individual with an annual prove-able income of over £150,000 or assets (not including their own residence) in excess of £500,000, this will also be an exempt second charge loan or bridging loan. If the application is on a joint basis, then both applicants will need to satisfy the assets or income assessment test.

The new rules are viewed by lenders in a manner that means that even a rolled-up bridging loan that requires no monthly payments is no longer acceptable if a client has limited or no proof of income.

The Council of Mortgage Lenders has again released figures showing that annual bridging lending has increased by 25% and now stands at around £2.5bn per year. Bridging loans are  becoming widely accepted as a tool for accepting clients’ short-term funding needs. The main advantage of bridging loans is that they can be arranged quickly when the client’s need is particularly urgent.

Bridging finance deals are often arranged at a fast pace, so a client needs to be sure they are getting good advice. It is important that when talking to a lender, an answer can be given right away, which is why speaking to a specialist bridging loan adviser is best. The increase in prevalence of bridging leads has led to a growing number of specialist brokers for this market. Some mortgage brokers will try to service the deal themselves, while others will pass the inquiry onto a specialist.

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.