The bridging lender said it will require “a solid exit route to pay the loan back on or before the due date” and that each loan of this type will need to be repaid with the sale of the property.
It added that it was providing these loans to meet a need, but would be doing so cautiously.
“Hope Capital will want to explore the reasons for the bad credit happening in the first place and how it has been overcome,” the lender said, adding that it wanted to be sure the cycle of poor credit has been broken and will not continue into future borrowing.
Hope Capital added that providing these assurances are received it will accept borrowers with county court judgments (CCJs), a settled bankruptcy, IVA or Company Voluntary Arrangement.
And it will also review applications from potential borrowers with outstanding or ‘rolling’ arrears.
Considered on own merits
The lender will continue to accept “less-regular cases” and those with unusual and complicated ownership structures as well as individuals, partnerships and companies on these loans.
There will be no credit scoring with each application considered on its own merits with underwriting dependent on a clear and feasible exit strategy to pay the loan back by the due date.
Gary Bailey, managing director of Hope Capital said: “We have always looked at every application on its own merits and weighed up each loan individually.
“Some of the applications we have received in the past have been from people who might have a somewhat tarnished credit history but who have a very strong business case and a clear exit route. At low loan-to-values (LTVs) it makes perfect sense to grant a short-term loan when the case warrants it, with the condition that each loan is paid back with the sale of the property.
“This is particularly the case when someone has had credit problems in the past but these are now resolved, as long as we understand the reasons for this and we are confident this is not ongoing.”
The loans will be available across England and Wales for light, moderate and heavy refurbishment as well as for property portfolios and for businesses.
- For a residential purchase, rates will start from 0.69 per cent per month up to 75 per cent LTV, including to borrowers with under £5,000 of CCJs that have been settled at least 24 months ago. Other LTVs will vary according to the severity of impaired credit and whether any CCJs and arrears are current or settled. For borrowers with outstanding mortgage arrears the maximum LTV will be 40 per cent.
- For semi-commercial loans, rates will start at 0.85 per cent per month. A maximum LTV of 70 per cent will be available for a borrower with no bankruptcies, IVAs or CVAs and with settled CCJs of less than £5,000, down to 40 per cent for borrowers with rolling arrears.
- For commercial property the maximum LTV is 65 per cent with rates from 0.89 per cent.