Second charge lending on track to hit £1bn this year – Loans Warehouse
According to Loans Warehouse’s managing director Matt Tristram, the second charge market last reached this figure in 2019. He said the £1bn target was a “benchmark for success for second charge lending”.
Its Secured Loan Index report highlighted that in October the volume of second charge lending came to around £123.6m, which is up £13.4m on the previous month, and the highest recorded under FCA regulation. The previous peak was in 2019 at £118m.
These figures were boosted by the addition of Selina Finance to the market and the removal of pandemic restrictions.
Earlier this week Selina Finance launched an 85 per cent loan to value (LTV) second charge range.
Completions in October also grew by 10 per cent from September to 2,839, which is a record high.
Consolidation loans made up around 46 per cent of loans offered in this period, which was followed by consolidation and home improvements at around 30 per cent and home improvements at around 19 per cent.
The average completion time for second charge loans in October was 17 days, which is 1.7 days faster than September. The average term for a second charge loan was 18.8 years.
Around three quarters of loans offered in October were below 85 per cent LTV, which the report said was because first charge lending at higher LTVs had become more limited during the pandemic. Borrowers’ equity, therefore, was limited and second charge became an alternative method for raising capital.
The proportion of second charge loans below 85 per cent LTV was higher during the pandemic when first charge higher LTV lending was more limited, according to Tristram.
The report collates second charge lending figures from Optimum Credit, Oplo, United Trust Bank, Together Money, Masthaven, Norton Home Loans, Equifinance, Evolution Money, Spring Finance and Selina Finance.
Selina Finance launches 85 per cent LTV second charge range
Two-year, five-year and variable rate products at 85 per cent LTV are now available, all with a rate of 6.3 per cent. The maximum loan or credit facility size is £500,000, in line with all Selina’s products above 75 per cent LTV.
The 85 per cent product can be secured on a main residence or second homes, and a Hometrack AVM is accepted on properties valued up to £500k.
Stacey Woods (pictured) key account manager, said: “We’re excited to be adding to our product range as 2021 draws to a close.
“There’s been a lot of demand from our intermediary partners for an 85 per cent product, so we’re delighted to be able to offer this before the festive season kicks off.”
The new products have no early repayment charges (ERCs). Selina Finance provides flexible second charge mortgages that can be used as a standard term loan or a credit facility.
Selina Finance joins Brilliant Solutions panel
As a result, Brilliant members will be able to access Selina’s range of flexible second charge mortgages. Rates on the second charge deals start at 3.95 per cent, with loans available up to 80 per cent loan to value (LTV). They can be used as a traditional term loan or a drawdown facility.
The move follows a revamp of Selina’s product range earlier this year, including the launch of a new second charge loan at 5.7 per cent, available up to 80 per cent LTV.
Stacey Woods, key account manager at Selina, praised Brilliant Solutions for being a fast-growing firm with a national presence, adding: “Their packaging team have shown themselves to be really knowledgeable and engaging so far.”
Matthew Arena (pictured), managing director at Brilliant Solutions, added that Selina’s product proposition was “unique”, noting that the lender’s flexibility had made them popular with borrowers.
He continued: “Our members have expressed a lot of interest in Selina’s products and we’re close to processing our first completions, so we’re hopeful this is the start of a fruitful relationship.”
Selina Finance launches second charge loan
The product, which has a rate of 5.7 per cent and a maximum loan size of £1m, can act as a standard term loan or credit facility, where borrowers can draw and repay funds at any time for up to five years.
The monthly repayment amount is determined based on the outstanding amount, and permits borrowers to lower interest payable over the loan term.
It has no early repayment charges and no additional fees on further drawdowns. Third charges are also permitted with no rate-loading.
Selina Finance’s key account manager Stacey Woods said that the product was an “exciting addition” to its range and its creation was based on feedback from broker partners and client demand.
She added that there were more “positive enhancements” lined up for the rest of the year.
Clever Lending and F4B Network boost panel choice
The Home FlexiLoan allows borrowers to set up a credit line of between £25,000 and £1m which is secured against their property.
Borrowers can draw down funds in stages and are only charged interest on the amount released. Borrowed funds can be repaid with no early repayment charges.
Whatever loan amount remains outstanding on the fifth anniversary of the agreement is converted into a full-term mortgage.
Paul Day (pictured), director of business development at Clever Lending, said: “We’re privileged to be one of a small number of specialist distributors that brokers can use to access Selina Finance products.
“The ability to use equity within properties is nothing new – but having a pre-approved facility ready to use as and when borrowers wish – with speed – makes complete sense.”
F4B adds Hodge to panel
F4B Network has added Hodge Banks to its lending panel.
Hodge Bank offers residential and buy-to-let deals with a focus on holiday let and buy-to-let portfolio products.
Steve Swyny, commercial director at F4B Network, said: “We are seeing an uplift in buy-to-let business with the holiday-let market rapidly expanding due to the Covid-19 situation and Hodge’s portfolio product is already stimulating interest amongst our advisers as very few lenders offer such a facility.
“This is a panel addition which will help better service an increasingly diverse set of borrowing requirements and we will continue working with lenders who offer value and a real point of difference for our members and their clients.”
Emoov to buy seller properties to tackle delays and fall throughs
Specialist lender Selina Finance will provide capital for the purchases with a multi-million pound credit facility backed by GFC and Picus Capital.
Selina Finance will be initially providing £2m over the next quarter. Emoov will test the scheme in certain areas across the UK before rolling it out nationwide.
If a property listed on Emoov does not receive an offer within 30 days, the vendor does not want to go forward with the offers it has or the chain breaks they can request an offer from Emoov.
The firm will decide if it wants to buy the property based on criteria which is shared with the seller. It will then use an automated valuation model to suggest the best price which the seller can accept or reject.
The offer will be up to 97 per cent of the property’s value, costing sellers three per cent of the price to sell to Emoov. The firm claimed this was cheaper than the 20 per cent charged by other quick cash buyers available to people selling their homes.
Stepan Dobrovolskiy, CEO of Mushroom, Emoov’s parent company, said: “Property chains are a pain for the UK housing market. Transactions fall through, people waste hundreds of millions a year on fees. The existing solutions capitalise on the huge distress that chains are causing to customers.
“This is also driven by the short-sightedness of service providers and the unavailability of data. Emoov is the first company to offer an affordable data-driven solution to facilitate the transactions.”
Lendlord and Selina Finance team up for landlord credit facility
The credit facility is available up to £1m and will allow portfolio landlords to borrow against the equity tied up in their properties.
The loan can be secured on multiple properties through first, second, or third charges.
It works as a revolving credit facility serviced on an interest-only basis for a three-year term and landlords can draw and repay funds at any time.
Interest is only paid on the drawn balance and there are no early repayment charges or valuation fees.
Aviram Shahar, co-founder and CEO at Lendlord, said: “We are very excited to have the opportunity to work together with Selina Finance, which has a unique offering for property investors. This collaboration emphasises the continuous effort we invest to increase the value our platform provides our users.
“It was a natural fit, therefore, to embed a digital loan offering like Selina Finance, which is equipped to provide flexible and affordable finance to meet the changing needs of landlords.”
Andrea Olivari, co-founder at Selina Finance, added: “We’re very excited to be partnering with an innovative property management solution like Lendlord.”
Selina Finance doubles maximum loan term to 10 years
The loan is available up to £1m and can be borrowed against home equity or an investment property.
It works similar to an overdraft, allowing borrowers to withdraw funds as and when they need to. Also, they only need to pay interest on the outstanding funds.
The offering will operate as a ‘flexi-loan’ within the first five years, before reverting to a full repayment schedule for the remainder of the term. Rates start from 4.95 per cent and this can be fixed during the first half of the term.
The lender has also increased the loan to value (LTV) on its property investor product from 70 per cent to 75 per cent.
This will work as a revolving credit facility for portfolio landlords and can be held against multiple properties held by a special purchase vehicle (SPV) or individual applicant.
Selina Finance has also made changes to its underwriting and valuations by moving to a cash-flow based method which assesses affordability depending on business circumstances.
Its proprietary automated valuation model (AVM) has been altered to remove the need for a physical valuation. Instead, the algorithm will analyse various data sources to value a property including size, type, comparable sold values and market liquidity.
Andrea Olivari (pictured), co-founder of Selina Finance, said: “We pride ourselves on offering credit that is both flexible and affordable, enabling borrowers to easily unlock the value tied up in their property.
“Part of our vision is to make business lending as affordable as a mortgage with the flexibility of an overdraft, and these improvements to our product offering bring us one step closer to that.”
Darvish Heshejin, vice president of growth at Selina Finance, added: “We’re excited to make our products more accessible to SMEs and property investors across the UK. We’ve been busy during lockdown listening to feedback from partners about how we can improve our offering and implementing all the necessary processes and policies to make it happen.
“As the economy begins its recovery from the pandemic, we think it’s a perfect time to see some real innovation in the SME and property lending markets.”
Selina Finance raises £42m for consumer product
The series A fund raise includes £12m in equity and £30m in debt lines.
The equity funding, raised from a range of fintech investors including Picus Capital and Global Founders Capital, will allow the business to accelerate its growth plans and invest in technology.
Selina Finance also secured £30m in debt lines that will be used to support more SMEs and, following regulatory approval, consumers across the UK.
The company was founded in 2019 by Andrea Olivari, Hubert Fenwick and Leonard Benning to offer overdraft-style credit facilities up to £1m allowing SMEs and consumers to borrow against the equity tied up in their homes or investment property.
Borrowers can drawdown and repay funds whenever they choose, and pay interest on what is outstanding.
Selina Finance’s credit facilities are secured against property and rates start from 4.95 per cent.
Benning said: “We’re bringing a completely new product to the lending market which, unlike a conventional loan, offers customers real flexibility.
“Our customers can save time and money by only drawing down and repaying when they need to without the need to re-apply, plus the product is feeless and transparent which is what customers have come to expect in the 21st century.”
Technology powers the valuation and underwriting process, so property surveyors or other face-to-face visits are not required.
The new funding will be used to develop the technology further.
Fenwick added: “Homeowners deserve to be able to unlock the value tied up in the home they’ve worked so hard for, both at an affordable price and in a flexible manner.
“We want to help people tap into their real estate wealth whenever they need to borrow funds, by making the whole process, from application to funding, as seamless and as fast as possible.”
Selina Finance works with more than 200 commercial finance and mortgage distribution partners across the UK.
Selina Finance establishes property investment credit facility
The facility is aimed at experienced property investors and landlords with at least three units in their portfolios.
Rates on Selina Finance “flex-affordable” credit facility start from 5.75 per cent with loan terms up to three years. The minimum loan amount will be set at £25,000 and maximum loan amount £400,000.
The company said that the credit facility acts like a bridging loan and provides borrowers with a “simple and low-cost” way to access funds whenever needed, whether as a short-term finance option for buying a property before longer-term funding comes through, to finance the deposit of a new unit or refurbish an existing one.
Selina Finance has targeted turnaround times on its new credit facility of just five working days.
Michael Biemann, managing director of Selina Finance, said: “This new credit facility combines affordability and flexibility and acts like a hunting licence for savvy property investors and landlords.
“In recent months, activity among private landlords has really started to pick up after a tough four years and so the launch of our new product could prove to be very timely. As ever, the full loan application process can be carried out online, which makes for a faster and more seamless application experience for brokers and clients alike.”
Selina Finance’s Property Investment Credit Facility – that will extend up to 70 per cent loan to value (LTV) – is available to both individuals and limited companies. There is a one per cent arrangement fee on the total facility agreed and no early repayment fees. Broker commissions are two per cent of the total credit facility provided.