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Ownership of a listed building in the UK comes with a long list of pros and cons.

On the plus side, you may find yourself in possession of a completely unique property with the potential to generate huge capital gains over the course of time. Not to mention, it is an inspiring place to call home for yourself and your family.

In terms of disadvantages, the upkeep of a listed building can be much more of a challenge than that of a conventional home. There may also be strict limitations placed on modifications that can be made to the property (inside and out), ruling a great many potential renovations and improvements out of the equation.

Then comes the small matter of funding the purchase of a listed building, which is not quite as easy as simply shopping for a conventional mortgage.

There are three types of listed properties in England and Wales, which in all instances call for an entirely different type of mortgage:

• Grade 1: Buildings of outstanding or national architectural or historic interest
• Grade 2: Particularly significant buildings of more than local interest
• Grade 2: Buildings of special historic or architectural interest

The overwhelming majority of listed buildings (around 92%) fall within the Grade 2 category. This means the lowest level of protection and preservation, but at the same time, it can still result in major restrictions on what can actually be done with the property you buy.

For example, you may need to obtain formal planning permission simply to upgrade the windows or doors or to install exterior decking.

But many would argue that what you get in return more than justifies the downsides. Living in a listed property can be a genuine joy, but how do you fund the purchase of a listed building in the first place?

The Grade 2 listed property mortgage market

Qualifying for (or even tracking down) a mortgage for a Grade 2 listed property on the High Street can be difficult. Many lenders do not offer such products at all, and those that do have a tendency to restrict them to borrowers who fulfil fairly extensive eligibility requirements.

For example, interest rates on a mortgage for a listed property will usually be similar to those of a conventional mortgage. But while a standard mortgage may call for a minimum deposit of just 10%, it is often necessary to provide a deposit of 25% to 30% for a specialist mortgage for a listed building. In addition, it is not always possible to take out a mortgage on a listed building over a term of more than 20 years.

Mortgage availability and qualification criteria differ significantly from one type of listed building to the next. In the case of a listed property that features outbuildings, comes with a significant amount of land attached, or is used for any type of commercial or semicommercial purposes, finding an accessible and affordable mortgage can be more difficult.

Purchasing listed properties with specialist loans

Enlisting the support of an experienced broker can simplify the process of tracking down an affordable mortgage for a listed property. There are countless options available on the secured lending market, including short-term bridging loans.

Unlike a traditional mortgage, a bridging loan can be arranged within a few working days, and the funds can be used to purchase any type of property in any state of repair. They can also be taken out by individuals with poor credit, no formal proof of income, or even a history of bankruptcy. Whether you are planning to live in the property yourself, retain ownership for BTL purposes, or sell it on for capital gains upon completing any necessary refurbishments, a bridging loan can be a uniquely flexible and cost-effective solution.

Research from Home Selling Expert suggests that a full 31% of all UK home sales fall through at least once before a transaction is completed. This essentially means that buyers and sellers alike have a one in three chance of their plans being laid to waste by broken property chains.

A broken property chain occurs when one or more links in the chain of buyers and sellers fall through, resulting in the entire process being delayed or falling apart. This can be frustrating and costly for all parties involved, but it is also something that can be avoided in many instances.

Of course, there is very little anyone can do to control the behaviour of others involved in a property chain. Buyers and sellers alike are at the mercy of others within the chain, over whom they have little to no influence.

Even so, there are several steps that buyers and sellers can take to reduce the risk of a broken property chain.

Examples of these include the following:

1. Be honest and open. It is important for buyers and sellers to be upfront about their circumstances and any potential issues that could affect their ability to complete the sale. This includes disclosing any financial issues, such as credit problems or debts, as well as any concerns about the condition of the property.
2. Get a mortgage in principle: Buyers should obtain a mortgage in principle before starting the property search. This will give them a better idea of what they can afford and can also help speed up the process once a property has been found.
3. Choose a reputable conveyancer: Both buyers and sellers should work with a reputable conveyancer to handle the legal aspects of the sale. A good conveyancer will be able to identify any potential issues and work to resolve them in a timely manner.
4. Be prepared for delays. Even with careful planning, delays can still occur. It is important for buyers and sellers to be prepared for this possibility and to have contingency plans in place in case the sale is delayed.
5. Be patient: The property process can be stressful and time-consuming, and it is important for all parties to remain patient and flexible.
6. Get a survey: Both buyers and sellers should consider getting a survey of the property before the sale. This can help identify any potential issues and allow both parties to address them before the sale is completed.
7. Consider a bridging loan: If there is a significant gap between the completion dates of the two properties, buyers may want to consider a bridging loan to cover the period in between. This can help reduce the risk of the sale falling through due to financial issues.
8. Get a HomeBuyer report: A HomeBuyer Report is a detailed document that covers the condition of the property and any issues that need to be addressed. This can help buyers understand the true condition of the property and make informed decisions about the purchase.

Of the mitigation methods outlined above, the single best way to reduce the risk of a broken property chain is to accelerate the completion process with bridging finance.

Bridging loans afford mainstream bidders all the benefits usually reserved for cash buyers. Secured against the value of their current home, bridging finance can be arranged and accessed within a few working days, enabling buyers to beat competing bidders to the punch. For more information on any of the above or to discuss the benefits of bridging finance in more detail, contact a member of our team anytime for an obligation-free consultation.

The recent raft of Bank of England interest rate hikes and subsequent mortgage rate increases came as no real surprise. Quite the opposite, as it had been common knowledge for some time that the historic lows the UK had become used to were on borrowed time.

Today, we are looking at a picture where millions of mortgage payers have found themselves struggling to make ends meet. Having signed up for ultra-low-interest fixed-rate deals some time ago, they have now been switched to standard variable-rate products with much higher rates of interest.

Elsewhere, you have those who are struggling to qualify for new mortgage loans in the first place, something that is not just affecting everyday home buyers but is also having a major impact on the property purchase decisions of BTL investors.

Meeting ICR requirements

Increasingly, BTL investors are finding it difficult to meet the interest cover ratio (ICR) set by major lenders as a key aspect of their eligibility requirements. This is where the interest payments on a buy-to-let mortgage are compared with projected rental income.

Typically, BTL lenders have a minimum ICR requirement of around 145%. Unfortunately, this means that the recent interest rate hikes (and the prospect of further hikes to come) mean that BTL investors must now produce evidence of higher projected rental income on the properties they plan to purchase.

Something that inherently means hiking monthly rents and potentially making their properties less attractive to prospective tenants could also be completely out of the question in some scenarios, such as a property with a reliable long-term tenant already in place that you would like to hang onto.

Bridging the gap

Over the past couple of years, investors looking to pick up BTL homes with high potential have been demonstrating greater interest than ever before in bridging finance. Bridging loans work in an entirely different way from conventional mortgages, in that they are strictly short-term solutions.

A bridging loan is a secured loan issued over a term of up to 12 months and, in many instances, can be arranged within a few working days. The loan is secured against assets of value (usually residential or commercial property), and the funds raised can be used for any legal purpose.

All of this has made bridging finance particularly attractive to investors in search of more flexible and accessible options than conventional BTL mortgages. With a bridging loan, there are no minimum ICR requirements whatsoever, and you do not need to provide any evidence of a background in property investments.

If you have sufficient assets of value to cover the costs of the loan and a workable exit strategy (how the loan will be repaid), this is often all that matters to bridging loan specialists.

This can help BTL property investors bridge the gaps in the services being provided by mainstream lenders. With a bridging loan, a buyer can purchase a high-potential BTL property in any condition and conduct the renovations and improvements necessary to bring it up to scratch. Interest then accrues at a rate as low as 0.5% per month, giving the investor plenty of time to work out their next step.

When the agreed loan term ends, the bridging loan can be refinanced onto a longer-term facility, such as a BTL mortgage. Or if rates are still far from agreeable, the property can be sold to generate significant capital gains and repay the loan in full.

Essentially, bridging finance is about giving investors welcome breathing space, during which they can think carefully about their longer-term decisions.

Most homeowners looking to relocate barely think twice about completing a mortgage application. They simply apply for and (perhaps) receive a mortgage instinctively, locking themselves into the same binding long-term agreements as everyone else.

But what if there was a better way for existing homeowners to move to new homes without going down the usually complex and costly channels? Are there flexible, accessible, and affordable alternatives to conventional mortgage loans that are broadly available to mainstream borrowers?

Surprisingly, the answer is yes, and it takes the form of bridging finance.

To put the whole thing into some kind of perspective, here are just six of the countless ways a bridging loan can be better than a mortgage:

• Faster applications: With a mortgage application, it is not uncommon to wait up to 8 or even 12 weeks to gain access to the money you need. With bridging finance, the whole process can be wrapped up in just a few working days, never more than a couple of weeks. When time is a factor (which has a tendency to apply to all property purchases these days), bridging finance can be so much faster to arrange than a conventional mortgage.
• Property purchases for cash: With bridging finance, you essentially turn yourself into a cash buyer. By doing so, you gain access to all the benefits usually reserved for those who buy homes for cash. You can bid on properties at auction, you can place offers on off-market properties of all kinds, and you can qualify for preferential rates by buying your next home for a single (and fast) lump-sum cash payment.
• Easy to obtain: Comparatively speaking, obtaining a bridging loan can be surprisingly straightforward. Eligibility criteria for bridging loans tend to be much more relaxed than with a conventional mortgage. Your credit history and income level will not necessarily stand in your way, just as long as you provide your lender with proof of a viable exit strategy (how you intend to repay your loan). It is even possible to qualify for bridging finance with no formal proof of income and/or a history of bankruptcy.
• Can be used to purchase any property: Major banks place heavy restrictions on the kinds of properties their mortgages can be used to purchase. Elsewhere, bridging loan specialists place no such restrictions whatsoever on their products. If you qualify for a bridging loan, you can use the funds to purchase any type of property you like. This includes properties that would normally be considered ‘not mortgageable’, making it much easier to pick up homes in questionable conditions to then renovate to a higher standard.
• Rock-bottom interest rates: Bridging finance is designed to be repaid as promptly as possible and can be hugely affordable as a short-term solution. Interest is applied monthly at a rate as low as 0.5%, and all other borrowing costs are kept to the bare minimum. Most bridging finance specialists impose no fees or penalties for early repayment, meaning significant sums of money can be saved by repaying the full balance as quickly as possible. Unlike a mortgage, where early repayment can be extremely expensive, assuming it is even an option at all,
• No restrictions on spending: A traditional mortgage comes with the caveat of being issued exclusively for the purchase of a property. With bridging finance, the money can be used for absolutely any legal purpose whatsoever. You could use a chunk of the money to purchase a home or business property and spend the rest in any way you like. Lenders have little to no interest in how their money is to be used; they simply need to know that they will get it back in full and on time.

For the first time this year, average bridging loan interest rates increased slightly in Q3. But rather than adversely affecting the sector’s popularity and performance, data from Bridging Trends indicates quite the opposite. In the face of adversity, the UK’s bridging finance sector enjoyed its strongest quarter on record in terms of gross contributor lending.

Compared to Q2, quarterly performance increased by a huge 30% in Q3; a total of £214.7 million in bridging loans was transacted across the UK, up from £178.4 million in Q2. This is the highest combined contributor lending total recorded since 2015, when Bridging Trends was launched.

(Click to enlarge).

Of equal significance, the Bridging Trends report also showed a major shift in how bridging loans are being used by UK borrowers. For the first time, preventing a property chain break became the top use for bridging finance, accounting for a full 22% of all transactions (up from 21% in the previous quarter).

This bucked the trend of the five prior consecutive quarters when purchasing investment properties was the most common use for bridging finance.

“Following the base rate rises we’ve seen throughout this year and mortgage interest rates increasing across the industry, it’s no surprise that chain break bridging is the biggest use of funds for the quarter,” said Stephen Watts, Bridging & Development Finance Specialist at Brightstar.

“Borrowers that have had mortgage products withdrawn from them with little or no notice or have lost their sale due to their buyers no longer fitting mortgage affordability criteria would then turn to short-term funding solutions to ensure their purchase can still go through as planned. It will be interesting to see how this impacts next quarter’s data.”

Attributed largely to the growing uncertainty that continues to plague the UK economy, the use of bridging finance for investment property purchases plummeted from 24% in Q2 to 16% in Q3.

Interest rates are up slightly

Meanwhile, the average monthly interest rate payable on a bridging loan increased slightly for the first time, up from 0.69% in Q2 to 0.73% in Q3. However, this seemingly had no impact whatsoever on overall bridging activity, which reached a new record high between July and September.

There was also a slight increase in the average loan-to-value level of bridging products issued in Q3—up from 56.2% in Q2 to 59.6%. Regulated bridging loans accounted for 45.2% of all transactions, up slightly from 43.3% in the previous quarter. Average completion times increased slightly to 60 days in Q3 (an increase of three days compared to Q2), which may be a reflection of the record demand for bridging finance also recorded during this period.

While average interest rates continue to hover close to previous record lows, experts believe that further increases over the coming months may be all but inevitable.

“Considering the volumes we have seen in Q3, bridging finance clearly continues to be a useful tool for homeowners and investors alike. What has been interesting is the drop-off in bridging being utilised for investment purchases, which is likely due to buyers taking stock of the current market. While it’s too early for us to really feel the impact of September’s mini-budget, I expect this will be more visible in Q4,” said Gareth Lewis, Commercial Director at MT Finance.

“As predicted in Q2, interest rates have started to slowly rise to 0.73%, but it is worth noting they are virtually on par with Q3 in 2021 (0.72%). What comes next remains to be seen, but I would not be surprised if interest rates continue to rise and investors remain cautious.”

As things stand, you would be hard-pressed to find anyone with genuine optimism for the immediate economic outlook. Inflation in the UK is already hovering close to 11%, but experts are increasingly predicting a peak of almost 19% in the early stages of next year. All of this is likely to make the current living-cost crisis seem insignificant when compared with the economic hardship to come.

Consumer confidence is as low as it gets, average wages are in no way keeping up with escalating living costs, and people are being forced to make all sorts of modifications to their spending patterns simply to make ends meet.

Sadly, experts like Nick Jones, sales director for bridging finance at lender West One Loans, only see things getting worse before they get better.

Flexible finance in troubled times

But while the overall picture is somewhat pessimistic, it may not all be doom and gloom. With the growing availability and affordability of bridging finance, more people and businesses than ever before will at least be able to tide themselves over if facing a temporary economic shortfall.

There will even be those who are able to capitalise on the economic downturn in order to make the best of a bad situation.

“There will be opportunities for customers who are looking to expand their portfolios and make investments, and we will be here to support them,” said Jones.

Elsewhere, bridging and development finance specialist at Brightstar, Stephen Watts, indicated that “bridging finance is being increasingly sought to enable buyers to put themselves ahead of their competition”.

With available housing inventory continuing to outstrip supply by a considerable margin, those able to do so are setting their sights on potentially profitable property investments. And in many cases, they use short-term bridging loans to expand their portfolios at relatively short notice.

Figures from the most recent Bridging Trends Report found that, in spite of the current economic chaos, bridging loan volumes for Q2 this year were up 14%. Throughout the first six months of 2022, the most popular application for bridging finance was picking up an investment property.

The speed and simplicity of home buyers and investors looking to take advantage of time-critical property purchase opportunities. Not to mention, jump the queue and escape the trappings of conventional property chains entirely.

Cash buyer benefits

But it is not just the UK’s more established property investors that are finding bridging finance a useful facility. Conventional homebuyers are finding it increasingly difficult to secure property purchases via conventional channels.

Today, the typical mortgage application takes approximately 12 weeks to underwrite, authorise, and issue. In the meantime, competing buyers have up to three months to submit a superior offer and beat you to the punch.

Coupled with the risk of the seller simply pulling out of the deal at any time, conventional home purchases are becoming increasingly difficult.

With bridging finance, homebuyers can gain access to the benefits of purchasing properties as cash buyers. They borrow against their current home, they fund the purchase of their next home in a matter of days, and they beat all competing bidders to the punch.

In doing so, they eliminate the risk of being gazumped at the last minute and benefit from the property price discounts afforded exclusively to cash buyers (often up to 2% of the total property price).

For as long as the economic situation in the UK remains unstable, the appeal of bridging finance will continue to grow. Particularly for those who are asset-rich but cash-poor, bridging finance can be the ultimate affordable stopgap solution for times of economic turbulence.

So you have dreamt about starting your own farming business but don’t know where to start. Today we will be looking at how to get started, the pros and cons, and most importantly, what kind of funding is available to you.

Running a farm is not an easy prospect, and it is vital that you understand exactly what you are taking on before you start the process.

Important things to consider when starting a farm

Before you start, you must decide on what kind of farm you will be starting, which will be determined by aspects such as weather and location. You will need to be realistic about your options and budget so that you can be sure that you have taken all financial implications into account, such as technological investments, employee costs, repairs, and maintenance, amongst others.

Demand for what you are farming should be carefully considered, and it is vital that there is a market for your produce for your farm to be successful. While the idea of farming may seem like an attractive option, there are many eventualities that could lead to disaster, including floods, droughts, market price crashes, operating cost increases, and poor crop yields, to name but a few. Investing in effective irrigation systems and water tanks can go a long way towards tackling some of these issues; however, that comes at a price that will need to be factored into the overall cost when looking for funding for your new farm business.

If you are planning to farm livestock, you will need to have a good veterinarian with plenty of experience with farm animals. Waste management for livestock farming is also of paramount importance, and you will need to stay on top of it. Manure can be collected and used as fertiliser or sold for profit.

The next important thing to consider is what technology will be required for the type of farming you plan to do. Technology may include, but is not limited to, machinery, tools, specialist software, and livestock tracking devices. It is vital to keep all software up-to-date in order to get the best out of the technology you will be utilising. It is worth investing in items that will prolong the life of your machinery, such as rain covers and sheds.

Knowing your crop well and when to plant is absolutely imperative to being a successful farmer. It is also advisable to rotate your crops, as planting the same crop year after year can result in pest and disease issues. Soil conservation is just as important, so efficient soil testing will be essential.

Advantages and disadvantages of managing your own farm

While starting a farm may be the perfect choice for you, it is worth looking at the pros and cons, as running a successful farm can be a lot harder than you may imagine.

Advantages

If you do your research on consumer demand before deciding whether you are going to invest in livestock or agricultural farming, you will be halfway to a profitable future. The demand for farm produce, whether it be fruit, vegetables, meat, or wool, will always be there, making it a potentially very lucrative endeavour. Pricing things correctly will, of course, be the key to success, as will looking at your competition and marketing yourself and your products effectively.

The opportunity to diversify is also a big advantage when it comes to farming. You will not need to stick to one type of crop or livestock and can mix both if you wish to. Other forms of income can also be looked at, such as a petting zoo or a bed and breakfast. These opportunities can potentially generate some further income for you.

Another advantage is the sense of achievement you will experience when farming in a way that gives back to the environment and the local area. You will reap health benefits from being outdoors, and as farming is quite a physical job, it will go a long way towards keeping you fit and in shape.

Disadvantages

As there is always a downside to nearly everything, it is advisable to consider these before taking the leap into farming.

One of the main cons is that you will, at some point or another, have to cope with extreme weather. If the great outdoors is not for you, then it is probably safe to say that neither is the life of a farmer. Early starts, around 5 a.m., are typical, so if you are not a morning person, then this is not the career for you.

Harsh weather is not only hard for the farmer but can be detrimental to crops, particularly in the winter months. Strong winds, snow, and rain can ruin crops, especially when it is not the typical weather for the season. With global warming causing unpredictable weather such as extremely high temperatures, droughts, and floods, it can be difficult to predict what lies ahead. High winds can also damage farm property, such as fences and buildings.

Farming is also extremely hard work and is not for the fainthearted. Twelve-hour days are typical, and time off can be difficult as farm duties don’t stop. You will need to be physically fit and mentally strong to work in this industry. Hiring staff will alleviate these issues so that you can take a break at times.

Financing your farm with an agricultural bridging loan

Once you have done your homework and decided that managing a farm is perfect for you, you will need to work out what funding you will need to get started.

Agricultural bridging finance is available for those looking to start a farming business and is designed to provide short-term funding, typically between 1 month and 3 years. As it is a secured loan, the amount you can borrow will depend on the value of the assets you offer as collateral.

There are many uses for an agricultural bridging loan, including quick land purchases. As bridging finance can be arranged faster than other types of loans, it is an attractive option for those looking to buy quickly, particularly if you find a fantastic deal that requires you to act fast in order to secure the land.

Short-term funding, such as bridging finance, can also be used to purchase expensive agricultural machinery such as tractors, harvesters, feeding systems, etc.

Agricultural bridging loans can also be used for farmers wishing to diversify and move into other areas, for example, a zoo or café, which can be very costly but can be funded with short-term finance.

As farming can be somewhat risky due to weather and other external factors, sometimes funds are required to repair, recover, and restructure when there have been unexpected issues. Due to the speed at which an agricultural loan can be arranged, you will be able to get things back on track faster than if you were to take out a more traditional loan product, which will take significantly longer to arrange.

For livestock farmers, existing livestock, which is considered a tangible asset, can be used as security in order to secure a bridging loan to buy more. This gives you the opportunity to expand the business and increase profitability. Agricultural bridging finance is used by farmers a lot due to the ever-changing and often unexpected changes that occur in this industry when funding is needed fast until longer-term loans can be arranged. For this purpose, this type of loan product is the best solution; however, it is imperative that you consult with a specialist broker who is experienced in this area and can give you all the advice you need and help you secure the best deal.