The Finance Ward

The Finance Ward Helping property investors raise finance

Bridging / Development / Commercial / Complex BTL's/HMO's

02/08/2022

Commercial Purchase

First-time buyer, first-time landlord.

Had a good chat with this client about all the possible finance options when building a portfolio.

To be fair, they had a very clear goal in mind and really used that exercise as a tick box to reconfirm what they had in their mind will work… and it will.

They understood being a first-time buyer with no experience as a landlord will limit their options initially when raising finance… But still possible.

They also understood that this will also reflect in the cost of the loan and set up fees.

Regardless, they were taking a long-term view and were set that building a commercial portfolio is the way forward for them.

I sourced a lender that could offer up to 70% LTV (loan to value) based on the asset they were purchasing. However, to help keep costs down, client went with 60% LTV as the rate dropped by 1%.

They also understood that going down the commercial route, it made sense to work with a solicitor who has experience in this area, even though the cost were slightly higher than expected (this paid dividends for them during the application)

I like this case study because it shows if you have a plan, more often than not there are ways to make it work. You just need the right people doing the right jobs and understand (especially in the property space) that playing the long game is key.

DM if you need to raise finance

Anything bridging, development, commercial & complex BTL’s (HMO, Holiday lets, multi-unit blocks & adverse credit to name a few)

13/07/2022

*** Auction purchase gone wrong… Or did it? ***

Client of mine went through the motions of trying to purchase at auction for the first time.

The property didn’t hit the minimum bid, twice.

My client being savvy, approached the auctioneers after and made an offer that made sense for everyone… So far, so good.

They come to me with the offer accepted and asked me to raise the finance for a semi-commercial purchase, no problem.

When asking where the deposit is coming from, client advised they need to raise it from one of their other BTL’s, great!

To adhere to the auction timescale, 28 days, we were looking to cross charge a bridge to get it over the line quick, then refinance out… Sound like easy work.

But no!

This is where the issues started (I love my job)

Client had enough equity if we cross charged multiple properties. First issue for the client, was the fees involved. Understandably, they didn’t want to spend the extra money on legals, valuation fees (or take a higher rate for desktop val) and spend the extra money on refinancing multiple BTL’s to get out of the bridge and pay ERC’s.

There wasn’t enough equity just using one BTL and bridging with retained interest. We also looked at servicing the debt and part service, part retained to get a higher day one loan. This option didn’t work as the client didn’t want to pay the monthly figures on the bridge.

We even looked at a short-term bridge and submitting the semi commercial term mortgage at the same time to get them out as early as possible, but that didn’t work for them either.

All in all, the bridge wasn’t going to work for the client and they either had to pull out and lose their initial deposit to the auction or come up with a solution.

I called the auctioneer (who was great by the way) and explained the situation. I advised if the vendor would allow us the time to sort this out with a term mortgage from the off, we can make it happen.

The client also increased the offer to help the vendor with their decision.

So, rather than my client losing the deposit and vendor struggling to sell at auction, again. We managed to agree a way for everyone to win.

And yes… I do actually love my job.

28/02/2022

Cracking deal this one!

Imagine £65k equity landing on your desk without doing anything.

Client had a family friend who moved into a retirement home 7 months ago.

It's a bit sad but they didn't have any family to pass their property down to.

Rather than going to market, they offered to sell it to a long term friends daughter (my client) to help her grow her portfolio.

Market value = £280,000
Purchase price = £215,000
Day one equity gained = £65,000

And it gets better...

The place needed a full referb so we organised bridging finance.

The lender I advised, offered 90% LTV on the bridge, based on the purchase price because the market value was £280,000.

Meaning she only needed a deposit of £21,500 plus fees and interest to secure the property in her name.

She also had to factor in the cost of work but she will make that back and then some looking at the GDV

Lovely!

06/12/2021

Interesting Case Study:

Client and her 2 daughters looking to downsize.

They found their dream home and offered before getting their finances in order.

To their surprise the vendor accepted her offer of £925,000 over the 15 other offers on the table (and it wasn’t even the highest bid)

Startled and scrambling to figure out the best way to proceed, she quickly appointed an agent to list her property (currently on the market for 1.4 million)

She had agreed with the vendor that she would proceed without needing to sell her property and does not have the available funds to purchase cash (tricky situation)

Lucky for the client, she has heard of bridging finance and was on the hunt to find a solution for her to buy the dream home for her and her 2 daughters.

This is where I come in…

Client was referred from another broker who does not deal with regulated bridging.

To cut a long story short. I organised a cross charge, regulated bridge. Meaning a second charge bridge on the current property and a first charge on the onward purchase.

Why structure it this way?

By doing this, she was able to use the total value of both properties, £2,325,000 to secure enough funds to purchase the onward with a LTV under 50%, offering her an incredible rate of 0.43%

She can also port the residential mortgage (current broker will sort) once her property has sold.

Essentially ticking all her boxes with speed, not missing out on a great opportunity for her family and allowing her to keep her existing mortgage.

If you have any clients looking to purchase investment properties, using creative ways to secure finance or need finance quick to secure a property, get in touch!

09/11/2021

Property Investors

Bridging lending returns to 2018 levels in Q3, reporting a total of £190.24m.

Bridging Loan Purposes:

28% Investment Purchase
13% Chain Break
12% Heavy Referb
11% Auction Purchase
9% Business Purchase
9% Regulated Finance
8% Re-bridge
7% Unregulated Finance
3% Other

Average LTV in Q3 jumped to 60.2% - However 75% LTV available

Average rate = 0.72%

The latest Trend figures show how the bridging market has pulled back from the disruption caused by the pandemic and that investor appetite for UK property is returning.

Source = Bridging Trends (MT Finance)

Another great review and amazing client 🙏🏽
23/09/2021

Another great review and amazing client 🙏🏽

21/09/2021

Just a heads up…

Not all lenders are systematic when looking at an application.

Yes, many of them make decisions based on a computer telling them yes or no, and these have their place in the market.

However, a lot of lenders we work with have a manual underwriting process. Meaning a human actually looks at your case before making a decision (who would have thought in 2021 ay)

So, why could this be a benefit to you?

Well, if you have a “quirky” situation (most of us do) that needs to be considered.

Assuming you have a great broker who can get the message across correct (Shameless plug)

Having another human look at it can literally be the key factor in getting the mortgage over the line.

But all jokes aside, there are many of us decent brokers with access to these lenders.

Just make sure you reach out and seek professional advice if you’re in a position to purchase/re-mortgage but aren’t sure if you qualify.

20/09/2021

If your fixed rate is coming to an end on your mortgage and you’re concerned because your situation has changed for whatever reason.

If you’d prefer another fixed rate, rather than automatically switching to the lenders variable option.

You can potentially look to do a “product transfer” without the hassle of full underwriting.

Of course, please seek advice before committing to anything to make sure this works for your situation but something to think about.

Client's main goal was to keep his current property to rent out and buy a bigger home for the family.This was all during...
20/09/2021

Client's main goal was to keep his current property to rent out and buy a bigger home for the family.

This was all during the pandemic. Lenders criteria were constantly changing, so it was a complex case to sort out at the time, with him being a company director.

After the initial chat with Darryl, it was clear how much he wanted this for the family. In my mind, we had to find a way to make it work.

Lucky enough, there were a few lenders who looked at the situation and were happy to offer the mortgage. Happy days!

16/09/2021

If you’re a company Director or own more than 25% shares in a business, this video is for you.

There are lenders that will consider your retained profits and dividends as part of your affordability.

Meaning, if your retained profits are higher than the salary you pay yourself, you could qualify to lend more doing it this way.

Drop me a message if you have questions.

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