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Tag: Bridging Finance

Scottish property Development Finance

Scottish Property Development Finance Continues Unhampered

Brexit is the big word and will continue to be for the foreseeable future in terms of property investment. It doesn’t seem to matter what is being explored and discussed, when the Brexit word enters the conversation, eyebrows are raised.

It could be anything from Scottish property development finance to bridging loans in Scotland, because Scotland is part of the UK, the Brexit uncertainty cannot be avoided.

Despite enjoying a different legal system and buoyant property market, Scottish investors still watch quietly as the Brexit negotiations play out. Those who are in the know, however, have indicated that Scotland will weather the property development finance issues and come out the other side without being the worse for wear.


Optimistic About Scottish Property Development Finance

Optimists abound when it comes to property development and it’s worth looking at who the real optimists are. After all, can they all be wrong?

There are several visible changes that have taken place in Scottish property development and the money exchanging hands within this industry too. Despite the attention it has drawn, few have indicated that any of this is harmful.

Until recently, Scottish property development projects have attracted a significant proportion of investors from abroad. Overseas investors dominated the market during 2017 and continued to do so during 2018. The Brexit word certainly didn’t scare them off.


Changes in Corporate Tax Relief

There have been some concerns that since the chancellor has moved to scrap corporate tax relief for foreign property investors that interest would wane. The expected drop in Scottish property development and the related property development finance has not happened.

What is also happening is that UK investors are looking north once more. Probably because they expect to enjoy better returns on their investment and get more bang for their buck.

Miller Matheson, executive director of CBRE, has made his views clear. In Scotland, the market has developed a resilience in remaining buoyant despite the “cloud of political uncertainty” for years. This has meant that the concerns over Brexit have not made a material difference to the investment climate north of the border.

While director of the Scottish Property Federation, David Melhuish, pointed out that the wider issues on Brexit were “too clouded for a real picture”,  Mr Matheson points out that this is unlikely to make an impact of note on the market.


Property Development Finance – UK-Sourced

What is interesting, though, is that there is an upsurge in funding from within the UK. Effectively, money from within the UK is now entering the property development market in Scotland. This could be the crucial factor in growing the market when changes to tax benefits for overseas investors become a reality.

Scottish property development finance is beginning to originate from with the UK.  And it’s growing. This development is potentially going to become the bedrock on which future project funding is built.

The property development industry in Scotland has been heavily influenced by foreign investment. Consequently, many will see the changes as an opportunity for new UK investors. Property development finance is available through highly skilled professional brokers.

High street lenders and mainstream lenders are making funds available for this market. A good property broker will, however, be able to guide new Scottish property development investors. Alternative financing, if it is needed, can be sourced.


Finding the Best Broker

Belgravia Property Finance has extensive experience in sourcing excellent private finance deals, with specialists able to assist in Scottish property development finance and bridging loans. Always seek out an experienced and reputable broker such as those at Belgravia Property Finance.

When investing in property development, it is best to ask a niche specialist. For development property finance you can rest assured that the consultants and brokers at Belgravia will be able to guide you, especially to find the right bespoke arrangements for you.


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.


Bridging Loans In Scotland

Because property law is somewhat different to elsewhere in the UK, it can be difficult to obtain bridging loans in Scotland. This is the case, especially when approaching a traditional high street lender.

Bridging loans in Scotland by their nature are not a long-term solution. They are exactly as their name describes them – a short-term bridge to cover a shortfall when the mainstream funding for a transaction is not available for any of several reasons.

Typically, they are sought and offered to stem a cash flow issue that has arisen once a transaction has commenced. The transaction cannot be concluded because of an obstructive situation. Quite literally, they provide emergency funding while the clock is ticking.

That said, there are some, mostly private, lenders that provide access to bridging loans.


Bridging Loan Rates In Scotland

Bridging rates for loans secured against Scottish property have dropped significantly over recent years. This is due to an influx of lenders in the sector now lending in Scotland. Rates are available from 0.48% per month for regular bridging loans in Scotland and much lower from private banks, for high net worth individuals (HNWI) that qualify. Loan to values are generally up to 75% of value.

Scotland is also known for Below Market Value (BMV) bridging transactions, Belgravia Property Finance has successfully arranged 100% funding towards below market value purchases in Scotland. An example of a BMV deal is the client purchases a property on the open market value, the property has already had a valuation carried out (Home Report in Scotland), this values the property at £100,000, the property is marketed at this level but doesn’t sell, but the client negotiates a price of £70,000, this is now a below market value transaction.

Belgravia Property Finance can arrange a loan for the full purchase price, plus fees up to 75% of the value ie. a maximum loan of £75,000 in this case. Belgravia can then arrange exit finance via a mortgage. Rates for 100% loans which are below market value are higher than standard bridging rates due to the higher risk taken by the lender.


The Loans Are Unique

What makes a bridging loan unique is that it is a flexible product that is usually structured on bespoke terms that are unique to the specific lender, borrower, and circumstance under which the loan is being taken.

The loan will also be an interest-only loan because it is simply to cover other funding which, once available, will be repaid on the terms set by a different lender.

Bridging loans in Scotland are designed to provide access to funding secured against property, therefore, they can also be structured in different ways to include the security. Funding can be procured on either first or second charges or both. It is even possible to structure a loan across multiple properties.

Furthermore, any type of property can be considered for a loan and almost any borrower circumstance will be considered by the lender.


Newcomers To The Market

The financial crash that caused the credit crunch worked as a catalyst to bring about new innovative bridging products. Moreso, and especially in Scotland, new entrants to the market have forced change and a rethink of how the bridging loan market in Scotland is developing. Lower interest rates have also been seen in more recent years.

There are still far fewer lenders that will provide bridging loans in Scotland, compared to England, but the lending scene has improved substantially. Belgravia Property Finance has access to bridging loans that are unique and can connect you with different opportunities in private funding. There are even funders that will cover bridging loans in Scotland as well as England, Wales, the Channel Islands, and much of Europe.

Differences in Scottish property law have made it difficult for bridging lenders to provide loans across the UK. The few that do are specialists and are often accessible only through a specialist advisor.


What Are Bridging Loans In Scotland For?

Bridging loans are typically provided for:

  • Scottish commercial properties
  • Landlords that are building property portfolios both in England and in Scotland.

Applications for a bridging loan in Scotland will not follow the same procedure as applying for a high street mortgage. Using an expert broker means that you will find that the confidentiality and sensitivity are increased.

The level of professional conduct provided and expected is also much higher. Applications are processed quickly because bridging situations often accompany a sense of urgency. There are situations that without a rapid solution, transactions may in fact collapse. Something we would seek to avoid for our clients at all costs.

The typical bridging loan covers around 70% of the value of the property against which it has been secured. There are unusual situations, however, when the loan will cover 100% of the value of the property. This is the one similarity that can be seen with high street lenders.

Deals can take as little as a few days to finalise. They can, however, be expected to take between seven and fourteen days.


How Bridging Loans Work

Most bridging loans come in one of two forms.

Firstly, there is the closed bridging loan. This kind of loan is aimed at borrowers that have already completed an exchange on the sale of a property. They do, however, need the finance to secure the transaction. This type of bridging loan is easier to find and negotiate because risk to the lender will be reduced.

In the second instance, the bridging loan is known as an open bridging loan. These are provided in situations where a borrower has found a property that they wish to purchase. Their problem is that they have not yet sold their own property.

Increased risk of the first home not selling means most lenders are reluctant to offer bridging loans when this happens. The probability of acceptance for an open bridging loan increases with the more equity the borrower holds in their property.

Learn more about bridging loans in Ireland and Spain.

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