Fit To Lend

26/05/2024

We offer a range of finance solutions to support your Property Refurbishment projects, including:

• Bridge Finance
• Dual Phase Finance
• Refurbishment Buy-To-Let Mortgages

Whether you're planning a light refurbishment on a single unit or a more substantial project, we have options available to achieve the lowest borrowing cost, maximize the loan advance, and to deliver at speed where time is critical.

We are expert in property finance and focused on you.

Get in touch to discuss our project;
020 3633 4421 | [email protected]

20/05/2024

Riding the Interest Rate Roller Coaster

Late last week, it was reported that some major UK lenders have reduced their fixed-rate mortgage deals. While this will be very welcome news for many, it also reflects lenders' continued attempts to anticipate future rate movements. These adjustments come amid expectations of potential interest rate cuts by the Bank of England as early as June, contingent on continued inflation decreases.

Trends in the US, where inflation has slowed faster than many anticipated, further fuel optimism in the UK.

Coming soon after rate rises from several UK lenders, perhaps these latest moves could indicate a turning point rather than continued volatility – let's hope so.

In today’s market, when you’re borrowing, you need the best rates, and you need a finance partner that's expert, independent, whole-of-market, and focused on you—that’s us!

17/05/2024

Ground-up & Refurbishment Projects – Funding

Ground-up projects and substantial repurposing projects, such as converting offices to residential use, are typically assessed similarly across different lenders. Key metrics like Loan to Gross Development Value (GDV) and Loan to Cost help determine the maximum advance a lender might provide. The ability to articulate the strengths of the developer and the project will affect what lenders will consider lending and on what terms.

Refurbishment projects vary from light to heavy work. Some require planning consent, while others rely on permitted development rights or are cosmetic and need no permissions. Financing options include buy-to-let mortgages that allow refurbishment before letting, separate bridge loans for the refurbishment phase before refinancing or selling the property, and hybrid financing products that start with a bridge loan and switch to a buy-to-let mortgage upon completion of refurbishment work.

The cost of borrowing is often key to the viability of these projects. The type and size of charges and fees used by different lenders vary significantly, and less obvious characteristics of the lender's proposition can affect the ultimate cost of borrowing. On projects that involve a monitoring surveyor and stage drawdowns, the lender's back-office and underwriting functions are of particular importance to ensure good communication and decision-making, thereby avoiding potentially costly delays to stage drawdowns.

Whether you have a ground-up, repurposing, or refurbishment project to undertake, you really do need the best rates, but you also need a finance partner that's expert, independent, whole-of-market, and focused on you—that’s us!

12/05/2024

Inflation 101

The relationship between wage increases and interest rate decisions by central banks like the Bank of England is crucial. When wages rise, individuals have more money to spend, which can lead to higher demand for goods and services. This increased spending can push prices up, contributing to inflation, which in turn puts pressure on the budgets of both businesses and households. To manage inflation, central banks may adjust interest rates. For example, by increasing the base rate, the Bank of England makes borrowing more expensive, which can cool down spending and help control inflation. This decision directly impacts borrowing costs for businesses and individuals, affecting monthly mortgage payments. This illustrates the tension that can exist between people’s understandable desire for a pay rise and the need to control inflation.

So, pay demands, currently discussed daily in news headlines, pose a significant challenge to the Bank of England's interest rate policy. Inflation currently stands at about 3.2% while average earnings have increased by 6% over the past year. This prompted the BoE to maintain interest rates at 5.25% this month. A rate cut would have caused considerable surprise in the markets, and many now expect the first cut to arrive in late summer at the earliest—potentially prolonging the challenges and tough choices that face business and personal borrowers.

Bank of England Governor Andrew Bailey recently told MPs that he requires additional data before considering a reduction in interest rates. He also acknowledged to Members of Parliament that the existing base rate of the Bank is 'restrictive,' suggesting it is adversely impacting the economy. He emphasised inflation as the primary concern since inflation pressures in the past were difficult to control.

So, wages have increased and continue to do so, and unions have more unsettled pay demands, which may contribute to an expectation of more inflation, which in turn could cause further wage demands.

Let’s not forget the savers though, including many average retirees who have faced years of low returns; they can now earn positive returns due to the higher interest rates offered on their savings accounts.

Much of the time, borrowing brings benefits, helping us to buy our own homes, and helping businesses to survive and thrive. These current concerns with inflation and interest rates tell us that we need to be smart when we borrow and get expert independent advice and support.

In today’s market, you really do need the best rates, but you also need a finance partner that's expert, independent, whole-of-market, and focused on you—that’s us!

09/05/2024

SMEs Facing New Challenges Due to Banks and Regulators, Treasury Committee Finds

The Treasury Committee’s recent report examines how regulatory changes and insufficient banking support are affecting the growth and innovation of SMEs. Key findings include:

1. Unfair Debanking: Over 140,000 small businesses were debanked last year, often with vague 'risk appetite' reasons. The Committee calls this an "unfair debanking" practice, noting that it affects legitimate businesses across various sectors and leaves them without essential banking services.

2. Regulatory Concerns: The Committee urges the Prudential Regulation Authority not to proceed with plans to remove the SME supporting factor from the new Basel 3.1 standards, as this may hinder British small businesses' ability to compete globally. The Committee warns that these reforms could impose stricter lending requirements on SMEs than in other jurisdictions, potentially leaving them behind their European and American competitors.

3. Dispute Resolution: The Business Banking Resolution Service (BBRS) was criticised for settling only 58 cases at significant expense, leading the Committee to call for its replacement with an independent system that can better serve small businesses. The BBRS is seen as ineffective due to a lack of independence and poorly designed eligibility criteria.

4. Transparency in Debanking: The Committee calls for the Financial Conduct Authority to require banks to provide quarterly data on business account closures, categorised by reason. MPs believe this transparency will help address debanking issues.

5. Additional Support Needed: The Financial Ombudsman Service should receive extended powers to handle personal guarantees for smaller firms. The Committee emphasises that this will fill a gap in the existing system and provide the same level of support as consumers receive.

MPs observed a steep decline in small business loan approval rates, dropping from 80% in 2018 to around 50% in 2023.

Chair's Comment
Dame Harriett Baldwin, Chair of the Treasury Committee, commented:
"Smaller firms have had a torrid time over the last few years. Unfortunately, banks and regulators are making a tough world needlessly tougher for small businesses. They can't solve all the problems with a magic wand, but they can certainly do more. We hope banks, regulators, and the Treasury will heed our findings."

The full reports are available by visiting:
committees.parliament.uk/committee/158/treasury-committee/news/201265/small-businesses-are-facing-needlessly-tougher-circumstances-due-to-actions-of-banks-and-regulators-mps-find/

07/05/2024

Leading Buy-to-Let Rates From Your Ideal Finance Partner

At Fit To Lend, our focus is clear: providing effective finance solutions matched to our clients’ needs - Finance That Fits.

In today’s market, you really do need the best rates, but you also need a finance partner that's expert, independent, whole-of-market, and focused on you – that’s us!

Contact Fit To Lend: https://fittolend.com/contact-us/

Supporting Business With Finance That Fits

29/04/2024

Property Investors: Fixed vs. Variable Rates - Let's Crunch the Numbers

In the current market, the best deal often isn't the obvious choice when aiming for long-term profitability. For property investors, understanding the cost implications of fixed versus variable rates is crucial, especially with potential rate declines on the horizon. Crunching the numbers has never been more important.

24/04/2024

Responding to Uncertain Interest Rates in Buy-to-Let Mortgages

As the outlook for interest rates remains uncertain, some lenders are adjusting their pricing strategies for buy-to-let mortgages to better support BTL borrowers, whose affordability is increasingly stretched.

23/04/2024

Prepare Now: Major Tax Reform for Holiday Lets Approaches

As 2025 approaches, significant tax reforms will impact many UK property investors. Consider what these changes mean for your investments and how you can prepare.

03/03/2024

The recent London Plan Review Report of Expert Advisers, commissioned by the Secretary of State for Levelling Up, Housing and Communities pinpoints the pressing housing crisis as a significant hurdle in our capital city’s development. Despite the ambitious ten-year target set by the London Plan, London is facing a stark under-delivery of over 60,000 homes, highlighting a disconnect between policy intentions and on-the-ground realities. The report suggests that the complexity of the London Plan’s numerous policies has inadvertently stalled rather than streamlined housing delivery, posing a considerable challenge, particularly for SME Housebuilders who traditionally make a huge contribution in the capital.

The report calls for a streamlined policy mechanism that prioritises residential development on brownfield sites, suggesting that a simplified approach could be the key to unlocking London’s housing potential. This recommendation aims to bridge the gap between policy and practice, urging for a decisive shift towards facilitating rather than obstructing new home developments.

These findings suggest that for London to meet its housing needs and sustain its growth, a policy overhaul is required, and that by fostering a more conducive environment for residential development, especially on underutilised brownfield sites, we can pave the way towards a more sustainable and prosperous future for all Londoners.

For a detailed analysis, visit the gov.uk website: Housebuilding in London: London Plan Review – report of expert advisers

Fit To Lend: Specialist in Commercial Finance, offering advice, support, and a comprehensive range of solutions.

03/03/2024

A recent report authored by Amazon Web Services (AWS) in collaboration with Strand Partners, and titled Unlocking Europe’s AI Potential In The Digital Decade reveals that we stand at a pivotal moment for AI adoption, with UK companies embracing artificial intelligence at an unprecedented rate—a 31% increase from 2022 to 2023. This surge promises to add a significant £520 billion to the UK economy by 2030, potentially positioning the UK as a global tech superpower ahead of schedule. Key to this growth is the utilisation of large language models and generative AI by 70% of businesses integrating AI technologies.

However, the journey is not without its challenges. A notable digital skills gap poses a barrier to further technological adoption, with a mere 13% of businesses finding it easy to recruit digitally skilled employees. This gap highlights the urgent need for investment in digital skills training, a task requiring both public and private sector collaboration.

Encouragingly, there’s a strong appetite for digital learning among UK citizens, with 76% eager to enhance their digital skills. By addressing these educational needs and fostering widespread AI adoption, the UK may be well placed to unlock its full digital potential, benefiting industries and regions across the nation.

For a detailed analysis, visit the AWS website: Unlocking Europe’s AI Potential In The Digital Decade

Fit To Lend: Specialist in Commercial Finance, offering advice, support, and a comprehensive range of solutions.

03/03/2024

This week the massive Chinese vessel, Explorer No 1, completed its journey from Shenzhen to the Netherlands, offloading 7,000 electric vehicles (EVs) for the European market. This development underscores China’s growing dominance in the electric vehicle sector, led by BYD, which has surpassed Tesla in global sales. With seven more ships on their way, exclusively loaded with EVs, it’s clear that Europe is set to witness an unprecedented surge of Chinese EVs, challenging Europe’s more established brands with their competitive pricing.

The influx of affordable Chinese EVs is just a glimpse of the broader wave of competitively priced goods poised to enter Western markets, potentially setting the stage for economic shifts and trade discussions. Meanwhile, China’s economy faces its own hurdles, from a property market downturn to a slowdown in growth. Yet, in response, the nation is ramping up its manufacturing and export capacity, introducing a wave of exports that could impact global inflation dynamics, perhaps offering temporary relief from cost-of-living pressures but also hinting at possible long-term economic challenges.

For the UK, where inflation rates are expected to decline, this scenario may present a crucial moment for monetary policy adjustment. There may be an opportunity to stimulate economic growth and alleviate the financial strain on households and businesses.

Drawing on insights from an article by Andrew Neil in the Daily Mail – 24 Feb 2024 ‘A tsunami of cheap goods from China is about to slash inflation.’

Fit To Lend: Specialist in Commercial Finance, offering advice, support, and a comprehensive range of solutions.