Craig Upton

Craig Upton

Craig Upton has worked with UK Property Finance Ltd for over 18 years writing content for the websites and online finance publications. Craig writes website content, press releases and articles on popular financial brands in the UK. Creating strategic partnerships and supporting data with extensive research in the latest trends Craig is well versed with most products within the financial sector. Craig has worked within the online marketing arena for many years, having worked with British brands such as FT.com, Global Banking Finance and UK Property Finance, specialising in bridging loans and specialist mortgage finance. Craig has gained a wealth of knowledge and is committed to publishing unique content for our readers on various financial platforms supporting the products offered by UK Property Finance.

Mortgage Brokers Turn to Bridging Loans As A Quicker Route To Get Clients The Finance They Need

Business and domestic borrowers alike are increasingly turning to independent brokers to access the finances they need with speed and simplicity. In order to cater to this growing demand for dynamic financial products, brokers and financial advisers alike are showing growing preference to bridging lenders and comparable independent service providers.

During the second quarter of 2017, bridging loan activity in the United Kingdom peaked at an impressive £150 million. Once a comparatively niche and unexplored area of the mortgage market, bridging finance has seen extraordinary gains over recent years, spiking a full 26% in Q2 compared to the first three months of the year. which represented the single highest quarterly increase since the launch of the Bridging Trends survey in 2015.

As for the primary motivations of brokers and clients alike for seeking these kinds of services, the vast majority cited the inevitable delays in receiving financial assistance from traditional banks and high-street lenders. Particularly when looking to arrange larger loans like mortgages, traditional lenders are increasingly being viewed as inconvenient and unnecessarily complicated access points by the modern consumer.

The most recent Bridging Trends survey found that the most common reason for bridging loan applications during Q2 last year was to fund refurbishments and general improvements. Approximately 27% of all successful applications indicated this particular use for the funds. Delays in traditional mortgage application completions were the second biggest motivator, accounting for 25% of all bridging lending during the period.

Another interesting finding was the way in which, in spite of bridging activity as a whole spiking dramatically, borrowers in general sought significantly lower sums of money than in previous quarters. The average loan-to-value (LTV) levels dropped to a new low of 45.4%, which again represents the lowest recorded since 2015. The struggling value of the sterling and ongoing uncertainty regarding Brexit are two of the possible factors contributing to the decline in average loan value.

On the whole, however, what’s clear is that the bridging industry in the United Kingdom is looking stronger than ever before as more lenders and borrowers alike explore alternatives to conventional mortgages and financial products.

Comparatively, low interest rates are also credited with the continuous growth of bridging loan applications across the UK, with average monthly interest rates coming out at 0.84% for the quarter.

“Demand for specialist finance remains strong, notwithstanding a slight increase in the average monthly cost of credit to the consumer,” commented MTF Director Joshua Ask, the group behind the Bridging Trends survey.

“What is interesting, however, is that for the first time since reporting began, mortgage delays are not the most popular use of a bridging finance loan, having been replaced by refurbishment.”

“While it is too early to form any conclusions, this may be indicative of a shift in the market. Coming off the back of recent increases in stamp duties and the changes to tax relief on buy-to-let property, more investors in this quarter focused on adding value to their existing investment properties.”

Wholesale Loans

The subject of wholesale loans is one of ongoing debate, with various lenders having entirely opposite views on their overall value. Nevertheless, when wholesale lending is handled responsibly and proactively, it has the potential to offer a variety of unique benefits for both investors and lenders alike. It’s simply a case of identifying the opportunities where they exist and proceeding at all times with due care and attention.

What is wholesale lending?

In the simplest of terms, wholesale lending refers to a system of taking the money of investors and passing it on to lenders at special wholesale rates. These lenders then provide loans to borrowers at a variety of levels at normal (or slightly lower than normal) rates of interest.

In a working example, one wholesale lender could pass capital from any number of investors on to any number of conventional lenders. These lenders would then make this money available in the form of loans for their own customers, earning money in accordance with their own interest rates and other borrowing costs. Likewise, as the money is paid back to the wholesale lender, it is repaid with interest or commission at a previously agreed rate. This in turn amounts to profit for the wholesale lender, who is then able to pay interest to the investors who provided the capital in the first place.

Why is wholesale lending deemed attractive?

There are two important reasons why wholesale lending is deemed so attractive by so many investors. First, it represents a good investment choice with the potential to offer returns that are generally higher than would be expected with any other comparably safe investment. Though returns vary significantly from one case to the next, they are generally considered comparatively generous.

But perhaps more important still is the way in which wholesale lending is indeed significantly safer than many other comparable types of investment. The reason is that the money is typically secured against the assets and property of the borrower, meaning that the loans are offered in a largely risk-free manner. Even if the loans are not repaid as agreed, the investors are unlikely to lose out.

As such loans are typically secured on borrowers’ assets, they can be provided to those who would typically be considered too high-risk to be offered financial support elsewhere. which in turn means that the market for these kinds of loans remains uniquely strong and demand robust at all times.

For more information on anything to do with secured loans, wholesale lending, or borrowing in general, get in touch with the UK Property Finance customer service team today.

Commercial Property as a Buy To Let Investment

Owing to recent tax relief changes that came into effect in April this year, a growing number of buy-to-let investors have found themselves turning their backs on domestic rental properties in favour of commercial investments as a more favourable opportunity.

In addition to this, some buy-to-let experts are also considering venturing out into more complicated areas of rental accommodation, such as multi-occupancy homes, which are popular with students who are studying away from their paternal nests.

Another area that is attracting an unusually high level of interest from buy-to-let landlords is semi-commercial property investment. This is where one part of the building is used for business reasons, such as a high-street bar or restaurant, and another part of the same property contains a residential flat.

Whereas the residential buy-to-let sector is experiencing a number of difficulties, the commercial property rental market is seemingly unaffected by recent changes, with industrial units being the primary candidate for healthy investment with serious returns.

Why choose commercial leasing as an investor?

The most significant advantage of investing in a commercial property with a view to letting is that the rents are typically much higher than with similarly priced residential lettings. This is a particularly appealing option at a time when most landlords have found themselves having to seriously think about lowering their costs while improving profit margins.

Although retail premises and office spaces are currently performing somewhat less admirably in the commercial letting arena when compared to industrial offerings, the commercial property sector as a whole is doing relatively well at the moment, with demand for such lettings consistently on the increase.

The effects of the Brexit vote

Another factor that is influencing this shift of focus is the Brexit effect and, in particular, the wide degree of uncertainty it caused. The most obvious result of this new period of insecurity was a dramatic increase in the number of low-cost commercial property investments entering the market.

‘The slowdown in the investment market during the summer months did inadvertently create a catalogue of available assets marketed at “Brexit factored” prices,’ read a recent report published by Knight Frank.

‘This was pivotal in delivering the strong uplift seen in Q4, which represented the fastest quarter-on-quarter growth in investment volumes for three years. Overseas investors continued to dominate, with £24 billion directly invested in UK commercial property in 2016, accounting for 49 percent of all investment.’

As the government seeks to make life more and more difficult for those in the residential buy-to-let sector, those letting commercial properties as a means of generating revenue seem to be having a much better time of things, with a growing number of UK investors choosing to abandon their domestic rental properties in favour of a more profitable experience.

Secured Business Funding

Raising the required capital to start and develop a new business is often the dictionary definition of a catch-22 situation.

In terms of available lenders, there are dozens of major banks, building societies, and financial institutions that are happy to loan cash to the required amount. Unfortunately, they only tend to be willing to hand over a penny if you can already prove your capacity (and that of your business) to pay it back. which can, of course, be difficult if your business either doesn’t exist or is only just getting off the ground.

You need money to get your business where you want it to be, but you need to get your business to a certain position before most will even consider lending you the required capital. Suffice to say, this is a difficult and frustrating situation that many business owners and entrepreneurs are probably all too familiar with.

An accessible alternative

This is just one of the reasons—albeit a big one—why secured business funding has the potential to represent a far more accessible and beneficial alternative. In terms of simply getting hold of the cash you need in the first place, a secured loan could offer the kind of flexibility and affordability no conventional loan comes close to.

The key difference with secured business funding is the way in which the loan is secured by property or assets of some kind or another. With conventional loans, you essentially need to prove your current financial situation to such an extent as to prove your capacity to pay back the loan. With a secured loan, this isn’t necessary at all, you simply need the required collateral, in accordance with the value of the loan itself.

This way, current financial circumstances and even your future financial outlook are superfluous considerations. This in turn significantly simplifies the application process, meaning that regardless of how much capital is required, it can be obtained far more quickly and easily. Not only this, but it is often true to say that secured business funding is offered with considerably lower rates of interest and overall borrowing fees than comparable conventional loans. This again largely comes down to the simplicity of the deal: you put up the required collateral, they provide you with the capital, and repayment agreements are reached accordingly.

Speaking of which, there can also be a great deal more flexibility in terms of repayment with secured loans. Along with the usual method of paying back a specified amount on a monthly basis, it is also possible to pay larger sums on a less frequent basis, or perhaps something like a lump sum inclusive of all agreed borrowing charges at a later date.

Even if the applicant in question doesn’t have the most outstanding credit history, this rarely tends to be an issue when it comes to secured loans. The only thing needed to facilitate the loan is the required collateral; the rest rarely comes into the equation.

Time savings, low costs, simplicity, and flexible repayment options—just four of the many benefits that accompany secured business funding over and above the traditional alternative.

Using a Bridging Loan to Settle Inheritance Tax

Pay your inheritance tax bill with a specialist bridging loan product.

Bridging loans are a unique, short-term financing product that can be used to pay off all manner of urgent debts, including inheritance tax bills, HMRC tax demands, and several other time-critical financial obligations that need to be settled quickly. They are typically used to bridge a short-term gap until a more permanent solution can be arranged and put in place, such as a commercial mortgage or some other secured loan product, when it takes a considerable length of time before the funds are released and made available to the borrower.

If someone has left you a valuable amount of real estate as part of a will settlement and you need to settle the inheritance tax before you can sell the acquired property, then a short-term borrowing product such as a bridging loan secured against those assets will enable you to pay the outstanding amount off quickly and effortlessly.

Would I be better off with a second mortgage?

If the funds are only required for a short period of time, then a bridging loan is often the most cost-effective solution. Unlike mortgages or second-charge loan products, bridging finance can be arranged much more swiftly, and the cost of borrowing is highly competitive in comparison. This is particularly true when you consider that a bridging loan is usually repaid in a matter of months, as opposed to the 10 to 25 years that a mortgage would last.

The interest itself is also charged on a monthly basis and can be added to the total cost at the end of the loan, along with many of the other charges, such as admin costs and broker fees. Additionally, there are no heavy exit charges to pay if you choose to settle early, depending on the individual loan product you apply for.

How much can I borrow?

Bridging loans can normally be sourced up to 70% LTV, and in some cases, up to 100% loan-to-value, if you are able to provide additional security in the form of a second or third property that you own. The actual amount you can borrow will vary from one bridge lender to the next, and this could be anywhere from £25,000 to £25 million, although this too will depend on the level of security you can offer when applying for your loan.

When to Apply for a Bad Credit Bridging Loan

Bad credit bridging loans: The facts of borrowing

If you have ever received marketing literature or seen any product advertising relating to secured loans and other borrowing products with low interest rates, then you should always be fully aware that the rates advertised are not the rates that are typically available to everyone. In fact, only a small percentage of borrowers will qualify for these unrealistically attractive loan products, and these are people with exemplary credit scores. If you have always managed your finances flawlessly in the past, then you should have no trouble at all securing a great deal on a mainstream financing product. However, most borrowers do not fall into this bracket, which is precisely why bad credit bridging loans were introduced in the first place.

With a bad credit bridging loan, the cost of borrowing and your chances of being approved for finance are not affected in the same way as with most other loan types. Moreover, the lender is mainly interested in the security you can provide, which could be the equity in a homeowner’s property, a number of rental properties in a landlord’s portfolio, or multiple commercial buildings if you run your own business. As long as the lender knows that they will get their money back, regardless of whether you default or not, your chances of being approved for this type of credit are exceptionally high, and the interest rates are much more affordable than you might initially be led to believe.

What can bad credit bridging loans be used for?

A short-term, asset-secured borrowing product such as a bad-credit bridge loan can be used for a wide variety of reasons. Perhaps you are looking to raise the funds to purchase a new property while waiting for your current home to sell. You could be a business owner or experienced property developer who was hit by an unexpected cash flow crisis or a badly timed HMRC tax demand with very little time to pay. Whatever the reason for borrowing, bad credit bridging finance can be approved and paid out in less than a week, giving you plenty of time to make that last-minute property purchase at auction or settle that urgent tax bill before it’s too late.

Bad credit bridging loans are ideal when:

  • You need to raise capital urgently, and you have the required security in a number of residential or commercial properties you own.
  • Your borrowing history and credit score are not of a high enough standard to qualify for a loan sourced from a mainstream provider.
  • You want to borrow from £25,000 to £25,000,000.

You only require the funds for a short time. Typically, from one to 12 months

Of course, there are other types of finance available for bad-credit borrowers, although most of these options take several weeks to put in place and the interest rates can be costly.

Buy-to-let industry beating all predictions

A recent dataset published by HMRC has shown that April’s stamp duty rise has hardly had any effect at all in terms of deterring new and existing landlords from buying up properties.

In fact, summer 2016 has been an extraordinarily busy time in the buy-to-let sector, with almost 25% of all residential properties sold in this period being bought either as secondary residential homes or as buy-to-let investments.

Of the 235,000 homes bought within the three-month period encompassing July to September, nearly 60,000 were bought by private landlords or those seeking a second residence. These are figures that have completely surpassed everyone’s predictions.

Here at UK Property Finance, we too have experienced a much higher-than-normal percentage of calls relating to buy-to-let financing options, with more and more people thinking about buying new properties with a view to renting them out in order to provide a steady source of income.

What makes the buy-to-let market so attractive?

Although the government has taken steps to make life more expensive for prospective buy-to-let landlords, in an effort to encourage more people to buy their own homes, the fact of the matter is that buying a property to rent it out can still be a financially rewarding experience.

Many landlords buy properties with the intention of charging rates of rent that are significantly higher than the associated mortgage repayments as a means of providing a new source of income.

In addition to this, with house prices rising all the time, buy-to-let properties can also be thought of as a long-term investment. As the worth of a property rises, so does the rent, and the increase in equity means that a buy-to-let landlord can usually remortgage a property within a few years in order to finance the purchase of additional buy-to-let real estate.

Of course, there are a number of potential downsides associated with becoming a landlord, but these should in no way discourage anyone from considering the available options.

As leading property financiers, UK Property Finance is able to source and arrange a wide array of short- and long-term borrowing options that are ideal for new and experienced landlords, whether they are first-time landlords, limited companies, or seasoned property experts.

Our buy-to-let products are highly competitive with affordable repayment options, and we also offer free and impartial expert advice to anyone thinking about any type of property investment whatsoever.

More Regulated Bridging Lenders Expected Next Year

According to a recent study conducted by Bridging & Commercial, more than half of the lenders who took part were of the opinion that the number of regulated bridging lenders would be significantly higher in 2017 than in 2016.

Unlike high-street banks and various other loan providers, bridging specialists are not forced by law to operate under FCA regulations, although a recent poll seems to suggest that borrowers are more inclined to do business with companies that are regulated than those that are not.

Bob Sturges, who is head of communications and PR at Fort well Capital, claims that the regulated bridging sector is saturated—at least from the perspective of a non-regulated lender.

He says that the number of new lenders seeking authorisation from the FCA has started to slow down significantly, a move that many have attributed to basic market forces rather than a result of the recent EU referendum.

However, according to another study published earlier this month, Bridging and Commercial uncovered that no bridging lenders at all had applied for authorisation since the Brexit vote.

Will there be an increase in demand for regulated bridging products?

With future market conditions looking somewhat unstable, it looks like many high-street lenders will be tightening their belts in terms of approving new loans, and this could prove to be an open door for bridging loan providers.

If this happens, then we are likely to see a significant rise in the number of new lenders appearing in a sector that some say is already overcrowded.

One problem associated with a saturated bridging market is that increased competition is leading to increased LTVs with lower rates, and this is something that has inevitably led to increased risk from the viewpoint of those underwriting the finance.

A further increase in regulated lenders may only make the situation worse.

According to Benson Hersch, CEO of the Association of Short-Term Lenders, although the number of bridging lenders applying for authorisation has come to a standstill since Brexit, there are still many who are seriously considering applying for FCA approval.

One of the advantages of being a regulated lender is that it enables the finance provider to offer bridging on primary residences and self-builds, which opens the doors to a much more diverse range of potential clients.

A main worry held by the FCA is that we might see more and more unregulated lenders offering bridging products that only regulated lenders should be providing.

If this becomes commonplace, then it is feasible to assume that the FCA could seek to have the entire industry regulated.