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Belgravia Property Finance Blog

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Feb
02

Market Growth – Property Development Loans in Dublin


The devastation that the 2008 crash brought upon the Irish property development market is no secret. In fact, there were conversations about whether it would ever recover. Of course, there are half glass full and glass half empty people. The dire impact on the Irish economy, did to some extent feed the pessimism of the glass half empty folk. The availability of Property Development loans in Dublin are now emerging as new growth is stimulated in the recovery.

Irish recovery from the 2008 crash

The Irish government nevertheless displayed a spectacular courage and strategy to resolve the economic crisis of the time. In fact, the admirable recovery is often cited by economists worldwide about to do something right. The one very evident consequence was the stagnation of property development in the immediate aftermath of the 2008 crash. This lead in subsequent years to a high demand for property simply to accommodate population growth and movement.

Together with the progressive recovery, the Irish government empowered the Property Development loan “phoenix” rising from the ashes. Although there are slight fluctuations in growth, the Irish Property market remains promising. Property Development has again become a favourable investment.

UK Political activity

It could be argued that political activity across the Irish sea such as the UK referendum on Brexit has influenced this growth even further. Together with Ireland’s apparent political stability, the capacity of her government to lift the country out of economic crisis and ongoing growth, Ireland is becoming a favourite investment location once again.

Demand for Property Development Loans in Dublin

The demand for property development loans has resurfaced in the Irish Republic. Mainstream banks continue to have stringent criteria that will sometimes exclude property developers that need more flexible lending. Irish Property Developers continue to look for funding outside the high street and private funding has become available again.

Funding for Commercial and Residential property development loans in Dublin are reaching new levels in terms of demand. This could be because the proximity to the UK makes Ireland an attractive investment without all the speculation surrounding the Brexit process.

Ireland desperately needs an increase in available property. As developments increase the demand for property will grow fuelling the development market. There are those that argue that the uncertainty in the UK will have a negative impact on Ireland. Thus far it seems that the opposite effect has taken place.

Property demand and prices increases

Ireland needs more homes than it has available. There is substantial government sourced funding available for social housing. There is also a clear demand for private investment in property development loans. The rise in house prices is indicative of this growth and the expected continued growth over the forthcoming years. If anything, Ireland is set to Boom. Those looking for a way around the UK departure from Europe will look to their closest neighbour for resources and business growth.

Get a good Broker

Experienced brokers are once again able to source some of the best Irish Property Development Loans in Dublin for investors seeking to develop and make a sound profit on property development. It’s a win win situation for both the borrowers and the lenders. Even while mainstream banks are avoiding being drawn into the demand. Belgravia Property can source funding for developers and refer excellent development prospects to private financiers. With exceptional experience and a sterling reputation, they are a really good choice for advice and support.

 


Jan
29

Auction Finance – Solutions For Quick Property Purchase

Property developers attend auctions to weed out some of the best investment opportunities available. Auctions, however, present a multitude of complexities that do not come with mainstream property purchases.

Financing an auction property can bring with it headaches and technical problems not seen in traditional property purchase scenarios. Auction finance is specifically geared to deal with these issues.

 

Auction Finance – What’s the Difference?

Most commonly, auction finance is a form of bridging finance. It allows the property purchaser some breathing space to get more traditional forms of finance in place.

In some cases, the finance must be completed quickly to secure the auction sale. The loans are usually secured against the property that has been purchased or other property that the developer already owns. The idea is to make the funding available as quickly as possible to allow completion.

Funding can be confirmed within hours. This is in complete contrast to the days or weeks that financing can take in traditional situations. The process is less onerous, and lenders will be more interested in the security available.

Auction finance sources will also lend to individuals who are self-employed as well as limited liability partnerships, limited companies, partnerships, sole traders, and employed individuals. Their scope for consideration is far wider than the average high street bank.

 

Not Just A Bridging Loan

Auction finance does not always involve bridging loans, however. When an investor or property developer sees a property they would like to purchase at auction, they can prepare financing ahead of time.

Mortgages and buy-to-let mortgages can be agreed in principle well before the hammer falls. This places the bidder in a position where they will know where their funding limits lie. Situations where the bidder knows their maximum bidding threshold places them in a position of strength.

Auction sales move very quickly. Especially for those new to them, it can be nerve-wracking and overwhelming. When the hammer drops, 10 percent of the price has to be paid up front.

Under most circumstances, the balances will be settled within 28 days. It is usually the 28 day period that necessitates auction finance in the form of a bridging loan.

If a mortgage has been agreed in principle and where it is being secured on either the purchased property or other assets, it is on rare occasions possible to finance immediately using a mortgage agreement.

To achieve this, you may need an experienced advisor broker. Your broker will know which finance companies work the fastest to ensure completion on time while still meeting all the requisite legal requirements.

 

Commercial Property

Auction finance is not only available for residential property. A business may want to extend its premises or buy new premises at a different location. If it is expanding, there may be good reason to buy additional properties.

Commercial property financing is also available under auction finance and is a good avenue to purchase value for money property. In the same way that individuals may want to seek a mortgage, it is probable that a commercial purchase at auction will require both bridging finance and a commercial mortgage to obtain the property.

If you are an individual seeking to buy a second home or a business purchaser for new manufacturing premises, good financing advice will be crucial. Established and reputable brokers will be well networked and able to find you a good deal.

Whether you wish to use a traditional lender or will need to find a private lender, Belgravia Property will be able to guide you along the way. For confidential unbiased advice, contact our London office.


Jan
26

Construction Finance – Why It’s Critical For Property Development

Developers quite often only pay their construction contractors between 60 and 90 days after they are invoiced. This means that construction businesses only have their invoices settled well after project completion.

Because of this quirk in the property development industry, construction businesses can experience a bottleneck in their cash flow. This is where construction finance can change the speed and efficiency of a project. It also means that managers don’t have to worry about cash drying up.

There are several different ways in which construction firms can access working capital to complete a project. This is particularly important for businesses that may be working on more than one project at a time. Late payment from one client could cause a bottleneck in funding for another project. Invoice discounting is also known as invoice trading. This method means that construction businesses can release funding to keep their projects afloat.

 

Invoice Trading As A Construction Finance Vehicle

Invoice trading is a straightforward method where a business can sell an individual invoice to release cash. As modern technology has advanced there are online invoice trading platforms where this is easily applied. It is a type of peer to peer trading, except the principles of traditional invoice trading are applied.

 

Application And Verification

Businesses apply only to join the virtual platform. This is very similar to when they would approach an agent in the real world. Approval is then processed, either by the online platform or by their traditional agent.

Either route can be chosen. Invoices for sale are verified and you’re good to go. Invoices can be as low as £1000 and can exceed £1 million. The invoice is then paid by the client into a client account which has been opened specifically for that purpose.

 

Sales Of The Invoice

Individual investors can buy the invoice. Alternatively, it could be sliced up and a share of the invoice sold to multiple investors. The proceeds of the sale usually add up to around 90% of the value of the invoice.

They will then become immediately available as cash for the business that has sold the invoice. As the invoice is paid, the proceeds are distributed to the investors by the trading platform or the conventional agent.

 

Online Trading Platforms – The Advantages

The most tangible advantage with online trading platforms is speed. Communication in the virtual world is instant and investors will be able to see a new investment opportunity immediately. Businesses that have sold one or more invoices will be able to access their funding within 48 hours. In this fast-moving world that is rather spectacular.

Invoices that include foreign debtors can be both funded and traded with ease using an online platform. Online platforms permit individual invoice trading rather than having to trade the entire ledger. This usually happens with invoice factoring. The construction firm seeking that finance gets the breathing space required without having to sell their entire book.

A combination of speed, flexibility, and an online support system means that online invoice trading makes the process quicker.

 

Other Considerations

Invoice financing provides better alternatives to credit cards, loans, and other traditional avenues. Invoice trading means that the construction firm can continue its day to day running without incurring growing interest payments and penalties that occur as a result of their clients not paying them on time.

It also means that delays in projects are avoidable. Penalties that are tied to their own contracts are avoided as a direct consequence.

 

When To Use A Broker

Many firms are still wary of using online methods. Their regulations will require that a financially competent person deal with their invoice trading.

A good broker will know where the best place to go to trade invoices will be. This is because every business is different. A contractor seeking construction finance will differ, whether they are plumbers, bricklayers, or core contractors.

Always seek advice before deciding about invoice trading. Particularly when seeking urgent relief in construction finance.


Jan
25

Development Finance Rates

Each Development Finance Loan is Unique

When it comes to development finance rates, each and every development loan is priced according to a number of factors, making most development finance loans individually priced, but within a set of parameters which determine to some degree the ultimate interest rate.

Rates for UK-based projects normally start at around 3.5% over Bank of England base rate or Libor. However, pricing can steer off-course when factors outside of general lending policy are part of the application, or if funding is provided from a non-bank funder, this may add to the overall cost of borrowing.

Equally, when circumstances favour the developer, such as pre-sales or a low loan to value loan, then lenders may be able to offer rates lower than advertised or promoted rates.

 

Belgravia Finance Brokers

At Belgravia Finance, we make it our priority to know lenders’ criteria inside out, so that when placing a new enquiry, we are well aware of what the rate should be for a given deal, which often is far more complex than the average loan.

Below is a handy reference guide for all property developers wondering what interest rate might be possible for a given development based on loan size, loan to cost, and loan to GDV. It does not take into account any additional criteria, development type, or location, but it is suitable as a guide.

 

Below is a Development Finance Rates Guide for UK Property Development

Loan Size Loan to Cost
(LTC)
Loan to GDV
(LTGDV)
Rate (margin)

Per annum

Lenders Fee Exit Fee
£10m+ Up to 60% 50-55% 3.50%+ 1.25%+ none
£250,000-£10m Up to 60% 50-55% 4.00%+ 1.25%+ none
£3m-£40m Up to 60% 60% 5%+ 1.25%+ none
£3m-£30m Up to 70% 60% 4.5%+ 1.25%+ 0%-1%
£5m-£100m+ Up to 80% 60% 5.65%+ 1%+ 0.5% / per 6 months
£5m-£100m+ Up to 90% 60% 6.5%+ 1%+ 0.5%+
£5m-£100m+ Up to 90% 80% 7.5%+ 1%+ 0.5% / per 6 months

 

In order to know what development finance rates your development will qualify for, please contact a specialist finance broker at Belgravia Property Finance to discuss your development. Initially, Belgravia Finance can provide an indication of costs after an initial fact find by phone, then detailed development appraisal and further information will be required.

For development projects that have complexities, you can expect rates to be higher, but not always – this very much depends on the lender and loan amount.

 

Here is a list of key underwriting concerns that will help a lender to price a loan

Location
Location, Location, Location – it always matters.

Loan Amount
Generally the higher the loan, the lower the rate.

Borrower Experience (Director/Beneficial Owner)
The more experience, the lower the rate.

Loan to Cost
The lower the loan to cost, the lower the rate.

Loan to GDV
The lower the loan to GDV, the lower the rate.

Proposed Exit
Pre-sales or pre-lets will be key to obtaining a lower rate. If the development will be retained then evidence of long-term refinance will be required.

Value of Units per sq. ft
Lenders may have a comfort level, say they lend on properties with a developed value per sq. ft not exceeding £1000, you should be well within their maximum range.

Area Demographics
Clearly, any development must be suitable for the area i.e. student accommodation near to a university that needs new student housing, residential accommodation in an up and coming area popular with young professionals.

 

The Building Contractor

Also, any contractor appointed should have a proven track record and accounts to prove turnover, which is expected to be significantly higher than the turnover from the project being funded. Each lender has their own criteria relating to contractors.

The above are just some of the factors to consider when choosing which lenders should fund your project. Remember, it should never be only for the lowest rate on the market. Finally, it may be that the lowest rate available is also from the ideal lender to work with.


Jan
24

As Brexit Looms Closer Will It Affect Overseas Mortgages?

 

Overseas mortgages are one of those financial products that we’ve all heard of, but probably don’t know all that much about. Most us may even have friends that hold an overseas mortgage, as the British continue their love affair with France and Spain. The “big referendum” has certainly not dampened interest in the European property market and the demand for overseas mortgages has certainly not dried up.

 

Understanding Overseas Mortgages

An overseas mortgage is a mortgage that is held by a UK resident and secured on a property outside of the UK. The property could be almost anywhere. Most overseas mortgages held by UK nationals are in the EU. Receiving an offer on an overseas mortgage is a bit of a paradox. It’s the same but different. The lenders, as always, are interested in the two main criteria. Affordability and the property that the mortgage is secured upon.

The most common route taken by UK nationals to obtain an overseas mortgage is to remortgage their current home in the UK. This will then pay a substantial deposit on the foreign property that they wish to purchase. When a foreign national buys a property in Europe two factors are a common thread. Lenders demand higher deposits and the interest rates are usually lower than in the UK.

 

Before Brexit

While the UK remains part of the EU, favourable terms will be available for citizens of the common market. There is, however, much uncertainty being expressed over what lies ahead. Property professionals, brokers, agents, and lenders seem to think that little will change.

Interest in the market seems to have escalated since the infamous Brexit vote. It’s almost as if there has been a bit of a last minute rush. There are a number of UK families that see themselves relocating before Brexit takes place.

 

Local Lenders

UK banks can and do provide mortgages outside of the UK. If they have an office in that country, then it is perfectly possible for them to lend in that country. That does not mean that they will offer the same terms as they might in the UK. Borrowing abroad also doesn’t mean that the lender is subject to the regulations as laid out by the FCA. High street lender or not.

 

Foreign Lenders

It is likely that local lenders where you want to purchase a property will be able to offer you a better deal. Specialist brokers will help you to find the best available deal. The terms may be even more favourable than those you would get with a UK lender. Across the Eurozone, there are countries that have much lower interest rates.

 

After Brexit

The rush for EU property has been fuelled by the motive to obtain fixed favourable terms for overseas mortgages extending beyond the departure of the UK from the EU. That, however, is only part of the story.

Property professionals are optimistic. Most believe that little will change and that the financial relationships will continue much as before. There seems to be little advantage for either side to sever the ties that bind. It is probable that UK nationals will still enjoy some free movement and that Britain may well remain part of the EEA.

 

Currency and Exchange Fluctuation

Factors such as currency exchange may have the greatest influence on overseas mortgages. The pound took a downturn shortly after the referendum. This took a few property purchasers by surprise midway through a deal. When the homeowner is paying the mortgage in sterling, currency fluctuations will influence affordability. This is something that both the lenders and the borrower must consider carefully.

Considerable strengthening or weakening of the currency used to purchase the property will also influence the long-term return on the property. Buying a property abroad may seem to be an exercise in borrowing money to make a purchase. Considering how much the property will be worth on completion of the mortgage is something that some fail to consider.

There will always be hoops to jump through when funding a property purchase in a country where you don’t live. There are always options to achieve a good funding deal to suit your circumstances. Belgravia Property Finance can offer specialised advice and help to broker deals that are not available on the high street. Contact Belgravia Property Finance for a confidential discussion on the way forward.


Jan
22

Business Loans and Alternative Financing

Small businesses and businesses under five years old struggle the most when it comes to sourcing affordable funding. Even medium-sized enterprises experience cashflow bottlenecks. There are different types of business loans and finding the right one for your business will involve some research.

Better still, by turning to a broker you are more likely to find one quicker. Brokers have an intricate understanding of who lends money to whom and on what terms. For the average borrower, approaching lenders directly can be a real hit and miss scenario. Especially if they’re new at it.

Reasons for funding come in a variety of shapes and sizes, much in the same way that individuals have diverse reasons. Vehicle financing, relief for their cash flow, or to increase productivity. Some business loans will be to fund the all-important research and development. The saying that you must spend money to make money is not lost on the entrepreneur.

 

Business Loans for Startups

Businesses come in different shapes and sizes. The variety of products and services available in the commercial world go as far as the imagination can stretch. With this variety there is a lender to provide for every need.

The startup loans company is a good example of a lender filling a niche. Most new businesses and startups struggle to obtain business loans because of the lack of trading history. A real chicken and egg situation for those that need the funding to trade purposefully.

 

Security

Unsecured loans are really very difficult to find, even for those that have been trading for several years. Most loans will be secured in one way or other. Asset finance is a favourite way for lenders to provide financial assistance to young businesses. Loans are otherwise secured either on property or by a guarantor.

 

Asset Finance

When considering assets, a lender will not only consider machinery and fixed property as security, but may also look at existing orders that have come in. A business that needs additional machinery in order to fulfil those orders will negotiate a deal with the lender. The lender will then secure the loan against the orders and the machinery that has been financed. On occasion, lenders will lease the machinery to the borrower and set a different loan structure to make it more viable for the borrower.

High street banks and conventional lenders are particularly shy of new businesses and startups that have not started trading. Businesses that have been established for more than two years struggle to convince bankers to lend them money. Less conventional lenders and private financiers provide better options and will consider business loans with terms that match the risk.

 

Find a Good Broker

Brokers know the market well enough to know where not to waste the client’s time. A startup could be seeking out finance for anything from £500 to £5 million. Where they turn to for that business loan will depend on the industry, the business plan, the viability, any assets that they already have, the experience of the core leadership of the business, and more. Lenders have different criteria, especially private finance lenders.

 

High Net Worth Individuals

High net worth individuals sometimes need loans to participate in a new business venture. Usually, this is because they have their capital locked up elsewhere. Even those with a lot of money will sometimes need to lend money. In fact, it may be more prudent for them to borrow money than to liquidate any of their higher performing investments.

Businessmen and women are usually good at their trade. They need someone that is specialised in business loans and finance to help them fund their business and move forward. Instructing an experienced business loans and finance broker means that the business leadership can get on with running the business while the broker finds them the funding.

For a confidential discussion about your business funding needs, contact the experts at Belgravia Property Finance.


Jan
19

Offshore Mortgages – Better Than A Well Kept Secret

One of the frustration that UK nationals living abroad experience is that the nature of their work dictates that they are non-domiciled. The dream of owning a home in the UK can become complicated without the correct advice. Offshore mortgages are very different products to ones offered to UK nationals that live and work in the UK.

Tax laws have been tightened over the last decade that also makes this area of lending even more complicated. A person can be resident in the UK, but non-domiciled. Having a UK-based employer that pays them in sterling may make obtaining an offshore mortgage easier. Even having a non-UK employer that pays in sterling into a UK bank account may make things easier.

The real headaches begin when the UK resident, that also happens to be non-domiciled for work purposes, is paid in foreign currency by a foreign employer. Add to this the complexity of fluctuating exchange rates and you’ll understand why the banks waver when offering offshore mortgages. Most offshore mortgages that fund property purchase inside the UK are funded from lenders based in the Channel Islands.

 

Offshore Mortgages – Varying Terms

Offshore mortgages are not regulated by the FSA, and before accepting one it is important to check with both your broker and tax advisor how vulnerable you are. Privately funded property purchases are essentially contracted in a way that the contracts can vary from one deal to the next.

This means that there are few hard and fast rules about how your funding agreement will be structured. For most that take this route, the convenience and access to funds combined with the expected long-term investment outcome more than sufficiently compensate for this.

 

Foreign Residents

UK resident non-domiciled British nationals are not the only people that seek out offshore mortgages. Foreign residents in Britain may struggle to find a high street bank to finance their property purchase. Anything from abandonment risk to loss of residence status makes the mainstream shy away. In fact, very strict internal regulations, as well as regulations dictated by the regulatory bodies, can make funding a property difficult. This applies whether the person is a high net worth individual or a foreign company or organisation.

It’s hard to tell what kind of impact Brexit will have on this market. The face of immigration and emigration is surely going to change. How it affects the property market is yet to be realised. Speculation can and will affect product availability but will not shut it down completely. The property market is here to stay whether it is buoyant or somewhat deflated. All lenders, whether they are private financiers or high street banks, care primarily about two things. The value of the property and the capacity of the borrower to pay the mortgage.

 

Non-Resident – Non-UK Nationals

Another group that is often forgotten when it comes to offshore mortgages are the non-residents. Non-UK nationals that are also non-resident but have a vested interest in purchasing property in the UK also struggle to find property finance. This may be for an investment or for a longer term plan to eventually settle.

Foreign companies based abroad may also fall into this category. Offshore mortgages are particularly attractive to these groups and they make excellent prospects for private finance lenders.

Because offshore mortgages are a specialist product, it is unwise to try and negotiate the terms yourself. It is a good idea to find an experienced broker that will not only find you the best funding source for your circumstances but will also be able to negotiate the best possible terms.

 

Seek Advice

Belgravia Property Finance offers advice and access to funding that may otherwise be difficult to find. Access is offered to UK nationals that are resident but non-domiciled. This includes expatriates living abroad. This group includes non-UK nationals and companies living or operating in the UK. Additionally, foreign individuals and companies that neither live nor operate in the UK.

To find out whether you would be able to access alternative property funding, contact the professionals at Belgravia Property Finance to make a confidential enquiry.

 


Jan
17

Asset Finance – Exploring the Diversity of Lenders

Every business experiences cash flow problems in its lifetime. For small and new businesses, it quite often happens early in their lifetime. Established businesses will occasionally experience problems with liquid cash.

This is not necessarily a reflection on the financial health of the business. Rather, it reflects the economy surrounding the business. There are multiple reasons why asset finance may be the best option. When there are healthy assets to secure a loan quickly this may be ideal.

There may be a merger, or a company may need to finalise an acquisition quickly. Asset finance may then be the best available option. Lenders are less likely to falter when a loan is secured on strong assets and asset finance can be made available quickly. Loans provided as asset finance also have lower interest rates because the risk of loss is substantially reduced. They offer a secured risk, whereas an unsecured loan will cost more.

 

Asset Finance and Borrowing Costs

The cost of issuing shares or bonds can be prohibitively expensive and take longer. Raising funds through the securities market is also difficult, especially if time is a core factor.

Additionally, asset finance is secured on assets that have not been secured elsewhere. If they have been, usually the other lender will have to agree to subordination. This is often not a quick option and therefore why secured asset finance is easier to obtain.

 

Finding Asset Finance Lenders

A simple Google search returns list upon list of lenders that may be willing to explore and offer asset-based finance for you. Rather than simply approach each lender individually, it is best to use a broker and financial specialist to do this for you. Brokers have special relationships with their regular providers and they are also likely to negotiate better terms and rates for you.

There may appear to be a sea of funding resources out there. Remember this. Every lender is different as is every borrower. Some lenders will only provide finance for businesses in certain sectors. Assets may seem ethereal to some lenders, especially when it comes to tech companies with software assets.

 

Different Types of Asset Finance

Asset finance can also involve seeking funding for specific assets. There are more lenders available for this type of asset finance. Companies may want to fund new vehicles, manufacturing equipment, or even increase their tech footprint. Lenders secure the loan against the asset. In some cases, they will provide a lease agreement for a set period of time and provide the lease for the company after they have funded the acquisition of the asset.

Renewable energy and aircraft are popular new acquisitions that can be funded against current assets. Healthcare equipment and the agricultural sector can access asset finance too. It all boils down to finding the right lender.

Brexit fears have not affected the UK’s internal asset finance industry in the way that some forecasters suggested. For most in the UK, it is business as usual. There will always be business to be done, thus there will always be asset related finance made available.

This type of finance cannot be secured for startups. Lenders want to see a stable trading history. There is a clear requirement of at least two years trading to be in place before any lending can be considered. Once a business has a stable history of trading and can show consistent goodwill, asset finance should not be out of their reach.

Belgravia Property offer borrowing advice in all areas of unconventional finance and will help your business find its best asset finance opportunities. With established relationships with lenders, Belgravia is in a position to negotiate good terms and conditions as well as interest rates for you. Contact us for more information.


Jan
15

Second Charge Bridging – Are The Lenders Disappearing?

Whether you are based in Cardiff, Birmingham, Glasgow, or Dublin, there will be property that needs to be financed outside of the conventional norms.

This can be because there is high pressure to close the deal. With competitors lurking like vultures ready to snap the opportunity from you, you may want to act quickly and decisively. Second charge bridging is often the route to take.

Frequently, there is something that is holding up the process. Individual home buyers could be waiting for the settlement of their current home sale. It’s even possible that their current property has not yet been sold. A second charge bridging loan is needed. And urgently.

 

Second Charge Bridging

Second charge bridging loans are a little different from regular bridging loans in that they cover the balance required for borrowing when there is already a current mortgage in place.

This kind of bridging, however, only takes place when there is sufficient equity in a property to support the lending. Finding a lender to provide finance for this kind of situation is not as simple as walking into a high street bank.

Most lenders that will offer second charge bridging will be non-status lenders and will take less interest in your credit history and details of income. They will, however, take a far greater interest in the property itself. The worry is that as Brexit approaches are these lending sources going to dry up?

 

Are Bridging Lenders Drying Up?

Most bridging lenders borrow from wholesale banks and then pass the tight terms on to their customers. The very nature of bridging loans means that the margins are cut very thin.

For the lenders, this kind of lending can become difficult as economic seas become rough. To catch up on the current housing shortage, the UK needs to build 250 000 new homes every year. In 2015, only 143 000 were built.

The four wholesale banks that provide the finance for second charge bridging lenders have been reviewing their position and winding back on this type of lending.

Rather than cause a shrinkage in the market for second charge bridging, it appears they may, in fact, have created a void that other non-conventional investors are willing to fill.

As Brexit draws closer, the property market may be flatlining in some areas. It, however, hasn’t fallen through the floor as some pessimistic forecasters suggested it would.

The availability of bridging loans remains a feature in the property market. It, in fact, may well be the financial product that keeps the market going. This bodes well while we negotiate our way through the economic uncertainty that many feel over Brexit.

 

Economic History Suggests Differently

In fact, the demand for bringing loans has increased since the Brexit vote. This may well be an indication that investors have faith that the market will grow again steadily once the dust has settled.

When we look back at the financial crisis of 2007 and 2008, retail mortgage deals dried up rather quickly. This left the market ripe for second charge bridging lenders to take the opportunity to keep the property market afloat.

When things became more difficult economically, it would seem that bridging lenders flourished. Bridging lenders do, however, need to assess their customers’ situation. This is to ensure they will not get into financial difficulty during the duration of the loan. Typically, a period of between one month and one year.

The economic circumstances that demand the necessity for bridging loans create unexpected byproducts, however. Terms that were unacceptable yesterday will become completely acceptable today, just to get the loan.

To explore the best possible terms for second charge bridging, you will need a reputable and experienced broker. Although based in London, Belgravia Property Finance provide advice and support for properties throughout the UK, including Scotland and Northern Ireland.


Jan
12

Expat Mortgages – Overcoming The Obstacles

There are two types of expat mortgages that have come into demand in the UK. The first being mortgages for UK nationals living and working abroad.

The second is mortgages for either UK or foreign expats living in the UK on foreign resources which are usually the main source of income.

Understanding the context in which the relevant mortgages are being discussed is important when seeking out property finance.

 

UK Nationals Living and Working Abroad

There are multiple legitimate reasons why UK nationals go abroad to live and work. There are some industries that by their very nature would demand this.

Petroleum and mining engineers are a good example. Maritime workers and oil industry employees move around globally too. Airline pilots, language educators, and archaeologists can be added to the list and these are only a few.

These professionals, while living and working abroad, still have their roots firmly entrenched in the UK. Most will still hold a UK bank account, in fact, many will return home as they get older. In fact, most will return to the UK once they retire.

This group of expatriates can sometimes struggle to get a mortgage for a plethora of reasons. Financial institutions are noticeably shy when it comes to providing mortgages for individuals that are not permanently resident in the UK.

The first problem is establishing the sustainability of an expat income and the second is establishing risk. The first may be a little easier to establish, especially if the expat works for an established and recognised company and for a long period of time.

Establishing risk is problematic because when a borrower lives outside of the UK, their credit rating can be difficult or impossible to trace.

 

Expat Mortgages and Additional Rules

That does not mean that no one will lend to an expat. It means that there will be a multitude of additional requirements. Additional checks and balances will need to be put in place before any expat mortgages are approved. Interestingly, there are some mainstream financial institutions that will offer this type of lending.

Overall, however, finding affordable expat mortgages is best left to an experienced specialist.

Expats mostly seek out buy-to-let mortgages. These appear to be the easiest mortgages to obtain, however, lenders want to be sure of several rules. Although you may be an expat borrower at the time the mortgage is taken out, will you still hold this status once it completes?

Expat borrowers will really struggle to find a mortgage if they earn less than £60,000 per year. This appears to be the lower threshold for mainstream lenders and most private lenders will require the borrower to be a high net worth individual. Mainstream lenders are also unlikely to lend more than £3 million. For expats seeking to borrow more than this, they would most likely be seeking private finance anyway.

The rules, however, go on. There are countries that the expat may be resident in that are on a restricted list regardless of income. When this happens, mainstream lenders will not lend to them regardless of their income.

What formulae are used to place countries onto and remove countries from the list is still a closely held secret, but it is worth watching changes in the lists. This will give those seeking out these kinds of mortgages an idea of what obstacles lie ahead.

 

Additional Rules

Aside from income and risk, there will be requirements that relate directly to the property. Lenders are likely to stipulate that a property may not be used for HMO. At a time when the rental market is not particularly buoyant, this excludes the potential for maximising rental income in this way.

If having a list of restricted countries is not already tough going, mainstream lenders also have a list of restricted properties. This means that the options on properties to buy becomes reduced too.

Sometimes it may simply be better to approach a broker that specialises in difficult mortgages and a broker that can access private lenders will be the better route to go.

 

Expats From Abroad

Expats from abroad living in the UK experience similar problems. Even though they may be earning a UK salary from a UK-based employer, establishing risk may also be a problem. Financial institutions worry about them simply leaving. After all, what they want is a customer, not a house. It can be difficult to prove past credit history until you’ve lived in a country for six years, especially when you don’t meet other criteria for a standard mortgage.

Speaking to a knowledgeable mortgage and finance advisor is possibly the best route to take. At Belgravia Property Finance, you will receive unbiased professional advice and access to non-conventional lenders that may be able to help you.