Alternative Bridging eases rates up to 70 per cent LTV; Foundation adds portfolio landlord product
Rates for the products now start from 0.6 per cent.
“We know that cost is always a consideration for borrowers, so we are continually reviewing our offering to ensure that we can continue to deliver the most competitive rates alongside the most impressive service,” said Jonathan Rubins, director at Alternative Bridging.
The rate reduction comes after the lender added a light and heavy refurbishment range for residential and commercial property. It also introduced a 90 per cent loan to cost loan for medium sized residential development earlier this year and has partnered with Nivo to speed up applications.
“We’ve got nearly 30 years in property lending and we know what it takes to deliver the right solution for a client, with cases that are individually underwritten by a team of experts, and a short line of command so decisions can be made simply and swiftly,” Rubins added.
Foundation Home Loans adds no-fee product for portfolio landlords
Foundation Home Loans has brought out a pair of limited edition two-year fixed rate no-fee products to 75 per cent LTV for portfolio landlords.
One of the products will be part of the lender’s core buy-to-let (BTL) range. It offers rates starting from 3.24 per cent, with the maximum loan size £750,000.
The other product has a rate of 3.44 per cent and is for standard houses of multiple occupancy, defined by the lender as having up to six occupants.
Both products are available for purchase and remortgage to individuals and limited company borrowers.
The rental cover requirement is set at a notional rate of 5.5 per cent. The stress test is 125 per cent for limited companies and basic rate taxpayers, and 145 per cent for all others.
Foundation Home Loans’ commercial director George Gee, said: “We are experiencing sustained activity across the BTL marketplace. These limited edition products provide further options for those portfolio landlords who may prefer a shorter fixed term or are looking to finance a specialist property type.”
He added that upfront costs could be a real problem for landlords, especially for those wanting a competitive rate, and said that the no-fee products would provide greater flexibility.
Hope Capital brings out lowest ever bridging loan rate
The option means that the first three, four or six months of the loan will be set at the reduced rate depending on borrower preference, with the remainder of the loan term returning to a higher rate.
The product is available for loans between £150,000 and £2.5m and for borrowers whose priority is cashflow due to property not generating day-to-day income.
It also includes mixed-use and commercial properties, a broadening of its previous scope for residential properties only.
The lender has also reduced rates in its capital and the seventies collections with rates starting from 0.7 per cent a month. Rates previously started from 0.79 per cent and 0.73 per cent respectively.
The rates for its light refurbishment rate now start from 0.80 per cent, and rates for medium to heavy refurbishment now begin from 0.82 per cent. This is down from 0.82 per cent for light refurbishment and 0.84 per cent for medium to heavy cases.
Hope Capital’s chief executive, Jonathan Sealey (pictured), said the discounted rate loan tied in with the launch of its fast track bridge product, where rates start from 0.39 per cent up to 65 per cent loan to value (LTV).
Sealey said: “The first half of 2021 has undoubtedly been a very busy time in the specialist lending market and we feel very confident that the demand for bridging finance will remain incredibly strong going forward. This is why we continue to ensure we focus on offering new innovative options which offer flexibility and affordability for the borrower.”
The firm has also added three members to its sales team which will help the lender handle increased business volumes.
He added: “As part of our growth plans, we’ve recruited more great talent, with business development managers now covering all parts of the country. As a result, we felt it was the right time to review our pricing model and reduce our rates, which we feel confident will be a hit in the market.
“We are committed to supporting brokers and ensuring they always have a number of competitive options available to help them meeting their clients’ bespoke needs.”
Bridging loan market steady at £146.5m in second quarter
According to quarterly publication Bridging Trends, developed by MT Finance, first charge bridging loan applications made up 90 per cent of market volume, up 12.2 percentage points from the prior quarter.
The report said this was partially motivated by investors and landlords seeking taking advantage of the stamp duty holiday.
The most common reason for using bridging loans was funding a purchase of an investment property, accounting for just under a quarter of contributor transactions, slightly up from Q1.
Traditional chain break was the second most popular use of bridging finance at 20 per cent of transactions, roughly in line with previous quarter.
Regulated refinance dropped to five per cent of contributor transactions, from 13 per cent in the prior quarter.
Regulated bridging loans fell in the second quarter, going from 47.7 per cent to 41.6 per cent.
The report noted that average monthly interest rates marginally increased in Q2 to 0.79 per cent, up from 0.74 per cent in the previous quarter.
Average bridging terms were 12 months with no quarterly change.
The average loan to value levels fell slightly from 55.2 per cent to 54.9 per cent, which the report said implied borrowers were not “overstretching themselves”.
The time taken to process a loan application also fell, with average completion times pegged at 47 days, down from 53 days in the first quarter. This was the lowest recorded timescale for completions since the second quarter of 2019.
Gareth Lewis, commercial director at MT Finance, said: “As purchases would have been at the top of people’s minds due to the stamp duty saving, it’s no surprise to see that first charge lending has significantly increased its share of transactional volumes.
“It will be interesting to see if this percentage decreases in the coming months as consumers look to raise finance out of existing properties to fund further property acquisitions or businesses.”
Enness’ head of specialist lending Chris Whitney added: “It looks like we have reached quite a stable platform over the last two quarters. Any previous pandemic worries seem to have been put to one side with the stamp duty holiday deadline creating a frenzy of activity. The higher level of investment purchases shows confidence in the UK property market is strong.
“I am slightly surprised that lending volumes weren’t higher. The market certainly felt very busy as we struggled to get valuers out in a timely manner due to volumes and many a solicitor was having to burn the midnight oil to keep up with demand.”
Brightstar Financial’s bridging and development finance specialist Stephen Watts said it was encouraging to see completion times had shortened since the last quarter as it suggested lenders were streamlining their processes to include remote valuations.
He added: “Some lenders are now offering AVMs up to 75 per cent loan to value (LTV) in some circumstances and with the ability for asset managers to benefit from modern technology and carry out virtual client meetings, more loan applications are benefitting from these time saving factors.”
West One Loans first half completions rise by almost a third to £485m
The lender said that key drivers of its performance were an increase in activity in the housing market, growing borrower demand as well as increased portfolio diversification by borrowers.
The lender also issued around £2.3bn in sets of terms in the first half of the year, up also by nearly a third compared to the same period last year.
West One Loans’ sales director Nick Jones (pictured) said that it was a strong period of growth for the lender and it expected the momentum to continue into the second half of the year.
He said that it was able to maximise opportunities from heightened demand in the market due to its high level of customer service, quality of the product and quick turnaround time.
He added: “Our long-standing and strong relationships with our broker and intermediary network have also been a key factor. When you’re working with quality partners day-in day-out, it makes the whole process more efficient and helps bring down the turnaround times to industry-leading levels.
“It also demonstrates the strength of the bridging finance sector right now, as increasingly people are looking to specialist lenders to achieve their property-owning aspirations.”
Securing the right refurb finance for your client in a changing market
Property refurbishment covers a whole range of scenarios – from simple internal decoration, fitting a new bathroom or kitchen right through to large extensions or turning a residential home into a home in multiple occupancy (HMO) and in some cases, converting commercial property to residential use.
We’ve seen growing demand from investors who want to take on a refurbishment project and it’s clear that some people who have managed to save a pot of money over the last 18 months, see property as a good place to make that cash work harder for them.
Property refurbishments are commonly financed with short-term bridging loans that can be used to buy, alter and refurb property providing a ‘bridge’ to when it can be sold or refinanced at a higher value in the future.
This type of funding can be arranged on a flexible basis up to terms of 24 months, during which time an investor can purchase a property in need of renovation and carry out the works required. In some cases, lenders will release funds in stages as the works progress.
Choosing what is best
When it comes to the most appropriate loan to finance a refurbishment project, there are two main categories for consideration – light refurbishment and heavy refurbishment.
Light refurbishment is typically where no planning permission or building regulations sign off is required for the works to be completed and there is no change of use to the property.
It is often the case that a property that is considered uninhabitable and therefore unmortgageable by conventional mortgage methods could be made habitable with relatively straight forward light refurbishment.
Since the introduction of new minimum EPC requirements on rental property it has become popular for light refurbishment bridging to be used by investors to buy a property that doesn’t make the grade and make the required changes that then enable the property to be refinanced or sold and suitable to be let out.
Heavy refurbishments are more involved, generally including structural changes to the property that require planning permission and building regulations sign off.
The returns on a successful heavy refurbishment project can justify the effort but they also tend to carry more risk because of the level of work that is required.
Typical types of heavy refurbishment include large side and rear extensions to a residential property, converting a commercial property to residential use or barn conversions. Sometimes a large single residential property can be turned into an HMO with just the addition of some simple stud walls.
However, despite there being little in the way of heavy structural works, this can still be considered a heavy refurbishment due to the change of use permissions required.
The lending landscape for refurbishment finance is becoming more competitive once again.
Last year we saw many lenders reduce their appetite for heavy refurbishments in particular, as Covid-19 created a number of potential pitfalls for completing a successful refurbishment project.
In recent months however, the lending options have returned and at Brightstar, we know that there are many new and exciting products coming into this area of the market in the coming weeks. Increased competition provides extra choice for investors and puts an even greater onus on you selecting the right option for your client.
If you work with clients who want to invest in refurbishment projects but you don’t have daily dealings with the frequently changing refurbishment finance market, there’s a danger that you could make an inappropriate recommendation when there are other more suitable options available.
Working with a specialist distributor in these circumstances can help you to access the expertise and products you need to secure the best loan to finance your client’s project.
Black & White Bridging appoints head of underwriting
McLaren joins from loan review firm Rockstead, where she specialised in advising on short-term property finance portfolios for corporate clients. She also has over 15 years of underwriting experience with Bank of Ireland and Bath & West Finance.
McLaren will oversee the underwriting team and work with Nicholas Goss, the lender’s head of investment and capital markets, to develop products in line with funding demand.
Damien Druce, commercial director at Black & White Bridging, said: “With Lyn’s arrival, our senior management team is now complete for the next phase of Black & White’s development.
“Lyn brings with her an immense knowledge of the bridging and development market and we and our introducers will benefit hugely from her experience and expertise.”
McLaren (pictured) added: “I see this as a fantastic opportunity to contribute to the growth of Black & White Bridging.
“My skills are particularly well suited to the position based on my experience built up over many years in the lending industry. I am excited by this new position and look forward to helping Black & White become one of the pre-eminent lenders in this market.”
BFS posts record month for lending in June
Lending in June was 51 per cent higher than for its previous best over 15 years of lending.
Lee Gilmore, head of business development at BFS (pictured), said: “We have far surpassed our goals and to do it during the pandemic is an amazing achievement.
“Three months in early 2020 were severely impacted by Covid, however, comparing H1 2021 to H1 2019 we still increased lending by 36 per cent.”
“We believe some of the increase has been through a shift in the way we structure deals, with more focus on the headline interest rates, which has undoubtedly attracted more customers,” he said.
“This performance gives us solid foundations on which to build further still,” Gilmore added.
Brokers expect bridging to be a lead growth segment in H2 – Shawbrook
The lender’s study of 187 brokers showed 26 per cent expected bridging to grow in H2, while 24 per cent said the same for semi-commercial lending and 23 per cent for buy-to-let.
Attitudes towards the market have shifted since the end of 2020. Some 74 per cent of commercial brokers in June said they felt confident about the prospects for growth for the rest of the year, up from 60 per cent in December.
Additionally, 71 per cent of brokers operating in the buy-to-let, bridging and commercial sectors predicted landlords would increase the number of properties in their portfolio in H2.
Investors’ buying patterns appeared to be shifting. Some 44 per cent of respondents said they noticed a change in the types of properties being purchased, with 42 per cent saying this was down to expected yields.
Brokers reported healthy business in general, with 67 per cent saying they had seen a rise in volumes since the start of the year.
Half of respondents had seen growth of 20 per cent or more in business levels.
Gavin Seaholme, head of sales at Shawbrook Bank, said: “In what could have been a really difficult period, a sense of urgency from buyers and sellers has instead created increased activity and higher values.
“Those in a position to diversify or expand their portfolios are not shying away from current opportunities.”
He added: “Bridging has evolved significantly in recent years and is now viewed as an effective financial solution for the longer term. It allows investors to access capital at a much faster rate than through more traditional finance options.
“The popularity of the product, and opportunity for growth, show no signs of slowing. For brokers, it’s important they make clients aware of all possible finance options,” Seaholme said.
Octane Capital tops £100m of lending in a quarter for first time
Octane received 325 applications and completed 166 loans in the three months.
The performance included a 15 per cent rise in the number of foreign nationals among its customers, the steepest quarterly rise yet.
Mark Posniak, managing director at Octane Capital, (pictured) said: “Activity levels have been off the scale. The stamp duty holiday was a driver. And we are seeing high demand from foreign nationals, mostly from outside the EU, who increasingly see UK property as a safe haven.”
The proportion of foreign national borrowers buying properties outside London was 36 per cent in the six months to end of June, up from eight per cent in the lender’s launch year in 2017.
Fiduciam completes complex bridge loan in Belfast
The complex bridge was against a five-storey office building in central Belfast, the former headquarters of tax firm KPMG.
The borrower had refurbished the property at the end of last year, but works were impacted by the pandemic. The marketability of the property was also affected as people worked from home.
Fiduciam provided the borrower with a loan on a 12-month term, to allow time to find a tenant.
Since then, there have been a number of viewings with most interested companies looking to rent the whole building, which is the preferred option for the borrower.
The case was made complex because one of the borrower’s guarantors was based in Northern Ireland, while the other was based in the Isle of Man. This meant Fiduciam had to deal with three different law firms.
Wilson Nesbitt in Northern Ireland, Keystone Law in the Isle of Man and McGahon & Associates Solicitors in the Republic of Ireland were involved with the transaction.
The deal comes ahead of the lender’s plans to expand into Northern Ireland by opening an office in Belfast later this year. It plans to extend business in the region following demand for its loans in the area.
Ken Duffy, Fiduciam country manager for Ireland, said: “This transaction demonstrates how Fiduciam puts the client at the heart of any transaction. The fact that we could provide the client with an attractive loan and do so in just six weeks meant that the borrower saved a huge amount of money; and a key building in central Belfast could be refurbished and turned back into valuable office space.
“We would like to thank Neil Logan and Rowan Gibney from Wilson Nesbitt, Max McGahon from McGahon & Associates Solicitors and Geoff Kermeen from Keystone Law for assisting us in this difficult transaction.”
He added: “This is a clear example of how we work efficiently to find solutions to challenging deals in an environment where other lenders may struggle.
“Our pipeline of business is building and we are growing at a rapid pace so we are now dedicated to opening an office in Belfast. This is paramount to helping more businesses and developers both in Northern Ireland and also in the Republic of Ireland.”