Large Bridging Loans

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,, 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 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.

Increased Involvement In Development And Renovation Finance

In the last few months, UK Property Finance has substantially increased its involvement in locating the funds needed to cater for the surging demand for development and major renovations requiring finance. UK Property Finance, which is a trading style of Penuptra Consulting Ltd., is a directly FCA-authorised and regulated business focusing almost entirely on niche area funding. The company has an enhanced reputation of being a “one-stop” financial shop where brokers and members of the public alike can, with one simple telephone call or email, access a wide range of property-related finance expertise and money. The offering includes brokering for residential, commercial, BTL, and equity release first charge mortgages, secured second and third charge loans, general insurance products, and first, second, and third charge, etc., regulated and unregulated bridging loans that can be secured on solely or a mix of land, property, or commercial units.

As part of its drive into the development funding arena, UK Property Finance has in recent months become involved in a multi-apartment, mixed-use, 3-stage development on the south coast of England. The client, a recently formed limited company where the directors have a huge amount of experience and specialise in obtaining planning permission for difficult sites and projects, agreed to a purchase price for the brownfield site, subject to eventual planning approval. They then spent the next 2 years putting in much time, effort, and money to obtain formal approval. With the planning now agreed upon, the value of the land had increased substantially, way beyond the price our client had originally agreed to pay the seller, and as such, this made the proposal very advantageous to our client, and, as you would have thought, many lenders. Our client then trawled through the normal high-street bank culprits in an attempt to locate the development finance required to complete the project before selling the already pre-sold units, but unfortunately, for one reason or another, our client was rejected.

Luckily, UK Property Finance was then recommended to our client via his local bank. Due to the increase in valuation, we submitted the case to one of our large and varied panel of commercial lenders and managed to enable the size of the purchase loan available to be based on the actual valuation of the land (with planning), not the purchase price (which was without planning). This pretty much meant that our client, who had already spent a substantial amount of time and money obtaining the planning permission, could now purchase the land without any further down payment from themselves.

The achievement of planning also increased the land value to such an extent that our client required minimal remaining financial input to complete the build prior to the properties being sold off to pre-agreed purchasers. Once Again At The Forefront

UK Property Finance has again been at the forefront of one of the latest trends that require bridging finance instead of more traditional forms of finance to enable it to occur. The speculative trend of purchasing land without planning permission and then as quickly as possible obtaining planning permission to greatly uplift the valuation, therefore enabling the land to either be sold at a substantial profit or built out using property development finance, has seen huge growth over recent years. has had two recent cases that highlight this scenario, each of which has had entirely different outcomes:

  • 1) A client wanted to purchase land without planning in Liverpool for £40,000. He had experience making similar purchases throughout the country and obtaining planning permission. This happened with this investment, and he quickly and subsequently increased the valuation fourfold, allowing the possibility of standard development finance to be obtained. At this stage, the client wanted to further increase the valuation of his investment asset by building out the properties mentioned within the planning permission, and as such, we raised the finance needed for him to complete four flats, which were sold for a large and substantial profit.
  • 2) Our second client already owned a relatively low-value, unencumbered plot of land valued at £100,000. The site was close to other land that had recently been granted planning, and our client wanted to do the same and increase the value of his land. His problem, however, was that he had used all of his own available funds to purchase the land, and he also did not have the required expertise to enable him to obtain planning by himself. We raised sufficient funds to allow the client to recruit the services of suitably skilled individuals who obtained planning permission, and the land was now worth over £400,000. As our client had neither the skills to build out the properties nor the inclination to do this, he followed his initial intention, which was to sell the land once the valuation had increased with the planning. He did this with ease and made a life-changing profit on his investment.

As both cases initially started with the need to raise funds on land without planning permission, the number of lenders available for this was virtually non-existent. We, however, have very close relationships with flexible lenders dealing with the full range of products required in the UK market. As the rates we obtained were similar to those available from many bridging loan lenders on standard bridging cases, both clients managed to obtain market rates for their projects, and completion occurred in less than 2 weeks from inception. One of the clients even had previous credit issues, which we managed to get accepted.

Small Bridging Loans Increasingly Popular Choice

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.

Third (3rd) charge bridging loan for non-resident UK national

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, 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. 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 managed to resolve his urgent funding needs.

Second Charge FCA Loans And Bridging Loans

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.

Link Lending Secures Additional Funding

Link Lending has announced it has secured another £50 million of additional funding from Deutsche Bank in addition to the bridging loan funding it has in place with Barclays.

The move was a clear signal that Link Lending’s strategy is to continue to grow its lending volumes in response to big demands for its bridging loan services. Short-term lending is a fast-moving sector, so it’s important that any lender can quickly deliver additional funds if needed. Some lenders rely on other bridging loans closing down before a new fund can be released.

Bridging loans have grown in popularity over the past few years as more and more consumers are opened up to the potential of such loans for short-term lending needs. Often, the spate of property programmes on TV has made people consider taking out bridging loans for building projects or other bridging projects as needs arise. If all requirements are taken into consideration, then bridging loans can be very useful in such circumstances. It is always worth asking the advice of a consummate professional when looking for bridging advice.

Bridging Loans Sector Growing Fast

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.