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Bridging Loans Secured Loans

Park Homes: How to Finance Yours

As average property prices continue to swell across the United Kingdom, more people than ever before are considering relocating to a park home. For many, it’s the appeal of downsizing to a luxurious and affordable property of a higher standard, perhaps in a far more desirable location. Perfectly possible to pick up a beautiful two-bedroom park home for less than £50,000 – around 75% less than you’d pay for a comparable house or flat in the same area.

Whatever the motivation, park home purchase volumes in the UK are at an all-time high.

But what about park home finance? What are the most popular and accessible static caravan finance options available? More importantly, is it possible to get a traditional mortgage on a park home?

Mobile Home Financing

Unfortunately, the answer is no – it isn’t possible to take out a traditional mortgage on a park home. The reason is that traditional mortgages are provided exclusively for the purchase of properties that also include ownership of the land the property is built on. With a park home or mobile home, you may be the full rightful owner of the property, but you don’t own the land upon which it resides.

As a result, standard residential mortgages are out of the equation. The same also applies to second mortgages, which fall under exactly the same rules as standard mortgages. After purchasing a park home, you continue to pay ground rent to the individual or organisation that owns the plot. Hence, you are never truly the owner of the land beneath or around your park home.

Specialist Caravan Finance

On the plus side, there are various alternative options to explore for financing a park home. Some of which involve no credit checks and no requirement to submit proof of income. Particularly for existing homeowners looking to relocate park homes, there are various accessible and affordable options to explore.

Away from the UK High Street, there’s an established and growing alternative lending section that specialises in flexible secured loans. Some offer loans specifically for the purchase of mobile homes, which for the most part work in exactly the same way as a traditional mortgage. A maximum of 80% of the value of the mobile home will be offered by the lender, meaning a 20% deposit payable on the part of the borrower. Though given the affordability of park homes, 20% deposit requirement isn’t usually the end of the world.

Park home loans that follow the same basic rules as mortgages are typically subject to the usual credit checks, along with proof of income and general financial status. Where bad credit is an issue, there are alternative options to explore such as bridging loans. 

A bridging loan could be used to tap into the equity of the borrower’s existing property, in order to pay for the park home outright and repay the loan in full when their former home is sold. Designed specifically for short-term applications, bridging loans with good rates can be uniquely affordable and convenient for park home purchases.

Compare the Market in Full

The UK’s specialist lending sector provides access to an extensive portfolio of loan products to suit all requirements and budgets. As a result, it’s important to carefully consider all options and compare the market in full, before deciding which way to go. If you have your sights set on a park home, consult with an independent broker and explore the options beyond the High Street. Even with an imperfect credit history or no formal proof of income, there are still countless various ways a park home can be financed in an affordable manner.

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Mortgages

Mortgage Arrears to Rise In 2019?

According to the latest estimates, approximately 76,500 domestic mortgages were in arrears of at least 2.5% of their respective outstanding balance during the first quarter of 2019. Within this, around 23,500 of these domestic mortgages had fallen into major arrears of 10% or more of the outstanding balance.

In the buy-to-let sector, just over 4,600 mortgages were in arrears of 2.5% or more during this period. Of which around 1,200 had fallen into significant arrears of at least 10%.

While these are far from the worst figures on record, industry watchers expect to see overall mortgage arrears rise significantly in 2019. In the event of a no-deal Brexit, the resulting mortgage arrears increase could be catastrophic.  Homeowners are feeling the pinch for a variety of reasons, though experts warn that the vast majority of severe mortgage difficulties are attributed (at least in-part) to inaction.

Rather than addressing issues head-on at the earliest possible juncture, struggling homeowners have an unfortunate habit of burying their heads in the sand. Work out the costs of a mortgage using our UK mortgage calculator to help yourself out today.

What It Means to Be ‘In Arrears’

It comes across as a terrifying term, but to be ‘in arrears’ simply means to have missed one or more mortgage payments, which are now overdue. Contrary to popular belief, the overwhelming majority of responsible households across the UK occasionally lose track of their financial responsibilities. It’s worth remembering that something as simple as a failed direct debit can result in an important payment being missed.

Hence, it’s not always the case of the debtor having thrown caution to the wind – some payments are missed entirely by accident.

In all instances, however, the time to speak to your lender is the moment you realise you’ve missed a payment. Better yet, ahead of time upon realising you might miss an upcoming payment. Every late payment that isn’t brought to the attention of your lender could result in penalties and credit score damage – both of which can be avoided by coming clean as quickly as possible.

Avoiding Repossession

The worst-case-scenario outcome of falling into arrears is repossession of your home. Nevertheless, it’s worth remembering that lenders across the board don’t actually want to repossess properties. Repossession is a complex, time-consuming and expensive process, which almost always leaves all involved parties out of pocket.

As a result, there’s usually a way to avoid repossession in even the most challenging circumstances. Some cases may indeed be lost causes, but most aren’t. So if you’d prefer to be proactive rather than put your property on the line, here’s how to avoid outright catastrophe:

1. Speak to your lender

As already touched upon, the most important and urgent step to take is to speak to your lender. Don’t wait until you have already miss repayments – speak to them ahead of time and discuss a mutually beneficial resolution. You may find they’re far more accommodating than you’d have expected.

2. Seek independent debt advice

If you can’t afford to speak to an independent financial adviser, there are several non-profit organisations that can offer advice and support. Examples of which include the following:

  • StepChange Debt Charity
  • National Debtline
  • Citizens Advice
  • Christians Against Poverty

It may also be worth speaking to an independent broker to discuss transference of your current debt to a more affordable loan product.

3. Offer to pay whatever you can

If you are unable to meet your payment obligations in full, it’s still important to pay at least something. The reason being that this will demonstrate to your lender that you have absolutely every intention of doing the right thing and aren’t simply attempting to get out of the deal.

4. Avoid repossession with a bridging loan

Last but not least, it’s often possible to avoid repossession by applying for a bridging loan. By submitting your property as collateral, the funds needed to pay off your remaining mortgage balance in full can be provided within a matter of days. You pay off your mortgage, you sell your home for its full market value and you use the proceeds to pay back the bridging loan – all additional revenues being yours to keep.

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Other Finance News

How Lending Criteria Has Changed Over the Last Ten Years

Changes to lending criteria over the years have affected the way most of us access credit facilities. Some changes in lending criteria have been more noticeable than others – most notably those affecting mortgage eligibility.  Indeed, some have found that the more recent lending criteria changes on the High Street have counted them out of the running entirely.

Lower Borrowing Costs, Higher Rejection Rates

It’s an interesting phenomenon, but as borrowing criteria has changed for UK borrowers, overall borrowing costs have become increasingly competitive.  Though it’s something of a contradiction, lower borrowing costs have been somewhat augmented by higher rejection rates.

Of course, this is all dependent on the type of credit facility you’re applying for and the lender respectively. But as a rule of thumb, loan products have become as competitive as they’ve ever been, though are proving more difficult to access than ever before.

Specialist secured loans may be the only exception to the rule, for which general lending criteria has remained fixed for some time. You provide collateral to cover the loan, you borrow the money you need and repay it as agreed. In the event of non-payment, ownership of the assets is passed to the lender – the simplest and oldest form of lending there is.

With conventional secured loans like mortgages and unsecured personal loans, however, it’s a different story entirely. Applicants at all levels are being squeezed and scrutinised like never before, resulting in a situation where millions of would-be borrowers are afraid to submit applications in the first place.

Bigger Deposits Payable

One of the most significant changes to lending criteria over the past 10 years is the requirement for increasingly large deposits to qualify for a mortgage. The problem is that as average house prices continue to climb, deposit requirements are pricing prospective buyers out of the market. In a typical working example, a property with a modest £200,000 value subject to a 20% deposit to qualify for a mortgage would mean somehow coming up with £40,000. For obvious reasons, this just isn’t the kind of cash most people can pull together.

Credit Check Reliance

The way things are today, it’s hard to remember a time when the credit rating system didn’t exist. Rather than becoming more relaxed and realistic as the years go by, the UK’s credit rating system is becoming harsher and more restrictive. Right now, the overwhelming majority of everyday credit facilities are approved or denied by way of credit scores alone. And if all this wasn’t enough, it’s becoming increasingly difficult to maintain a flawless credit history.

Lack of Flexibility

There’s a growing lack of flexibility in general today on the UK High Street.  It’s a classic case of “Our way or the highway”, wherein the lenders themselves expect their customers to bow to their demands. As opposed to fairly considering the requirements of the customer and offering tailored financial products accordingly. All of which goes some way to explain why more domestic and business borrowers than ever before are setting their sights on the UK’s alternative lending market.

Independent Lender Expansion

While all this is going on, the UK’s more proactive specialist lenders are creating dynamic financial solutions to compensate for the lack of flexibility on the High Street. Particularly where secured loans are concerned, applicants are not expected to undergo extensive credit checks, provide long-term proof of income and generally jump through hoops for the amusement of the lender. The growth and expansion of the independent lending sector is such that some (though comparatively few) major lenders have begun introducing new-era credit facilities like bridging loans and specialist property finance.

The extent to which Brexit further impacts lending criteria remains to be seen, though it’s unlikely the restrictiveness of today’s High Street will be reversed in the near future at least.

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Development Finance

UKPF helps first-time developer complete new build.

Building contractors often approach UK property finance for advice getting into property development and our most recent client showed more commitment than most. 12 months ago our client, Steve decided to sell his very successful building contractor to take up a new career in property development. Although Steve had 22 years’ experience in building, He had never gone the full length from ground works to resale so this was going to be a challenge.

Steve assembled a team and began work on the plot of land, he bought from the proceeds of selling his business. Over the next 6 months ground works soon evolved into a house like structure. The property was now wind and water tight with a pitched roof and windows and doors.

The plan was to create an executive property that reflected the affluent market in the local area. To bring this to a high specification more funding was needed. Steve found UK Property finance from an advert on Facebook promoting development finance and bridging loans.  An enquiry was made and within minutes a UKPF consultant was in touch with the client to understand his requirements.

The property had no existing mortgage and because it was water tight, Steve was given a wide choice from the whole of market. The rates were sourced based on the build type (timber frame) and because of the consultants’ experience, he was able to help the client complete an application quickly. Steve gave confirmation he wished to proceed and a surveyor had already booked into value the site for the lender.

The valuation was processed and the surveyor got in touch to inform UKPF that the property value had come in significantly lower than the client expected. This was based on comparable evidence of similar properties in similar condition within the local area. The consultant called to Steve to make him aware but reassured the client they could find a solution.

The lender was contacted by UK property finance to find an amicable resolution. Both came to an agreement to offer the client a bridging loan known as a ‘tranche draw-down’. This was a great outcome for the client because they could immediate take a percentage of the loan they needed to commence works again. The remaining funds would be issued as the property value increased, reducing the risk for all involved.

The positive result spurred Steve on to resume work and within a month the outstanding works had completed. UK property finance were able to support the client through-out the process and help the first of many developments.  

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Other Finance News

Energy Efficient Homes: It’s Not Just Solar Panels and Loft Insulation

However energy-efficient you think you are, a recent story published in The Mail confirmed you’re probably anything but.

For most of us, the homes we live in represent perhaps the biggest drains of all on our finite cash reserves. Not the case for Colin Usher and his wife, who pay a total of just £15 per year in energy costs for their Wirral home.

That’s not a misprint – that’s £15…all-in. Lighting, heating, hot water, cooking – a total annual energy bill of just £15.

Of course, it’s not as if the average homeowner has the ability or the inclination to go to such extremes. Nevertheless, the example set by the Ushers clearly demonstrates how every little helps.

And that energy efficiency isn’t only about eco-friendliness – it’s also good for your bank balance!

Simple Changes, Big Improvements

Solar panels and loft insulation may be the most obvious ways to quickly and permanently improve energy efficiency. Nevertheless, they’re far from the only ways of cutting costs.

We have a responsibility to the environment to do what we can to reduce carbon emissions, but it’s the hard-cash savings that motivate eco-friendly initiatives in most households.

So with this in mind, here are perhaps the eight simplest yet most effective things you can do to be greener at home and reduce the pressure on your pocket:

Lower Your Thermostat

First up, the UK’s official energy watchdog states that by lowering your home’s thermostat to 15 degrees during the day, you’ll be looking at total annual energy savings of up to 15%.

Reuse Your Waste

If you have a garden, stop needlessly letting all that valuable organic matter go to waste. Composting is not only environmentally friendly, but great for your garden and 100% free.

Low-Flow Taps and Showers

Switching to low-flow taps and showers can reduce the amount of water used per-minute by as much as 50%. While traditional showerheads blast our around five gallons per minute, more efficient showerheads reduce this to 2.5 gallons per minute or even less.

Seal Doors and Windows

Weather-stripping costs next to nothing, yet can make a remarkable difference to both the comfort and energy efficiency of your home. It’s incredibly easy to apply and makes no difference to the respective room’s aesthetic, so you may as well go ahead and use it.

Don’t Rely on Space Heaters

They’re great when there’s an alternative, but space heaters have a tendency to be the most inefficient devices in the average home. They’re designed to emit as much it is possible as quickly as possible, with no consideration whatsoever for energy efficiency. Hence, it’s best to minimise their use where possible.

Step Up to LED Bulbs

LED bulbs cost a small fortune a few years ago. Today, they’re comprehensively affordable and utilise up to 90% less energy than traditional light bulbs. They’re also designed to last years or even decades, which adds up to unbeatable value for money. The more light sources you have around the home, the more you’ll save by switching to LED lights.

Don’t Leave Chargers Plugged In

If you thought leaving your various smartphone, tablet and laptop charges plugged in was no big deal, think again. Incredibly, Energy.gov reports that unused chargers can be responsible for as much as 10% of the average home’s annual energy bill. All of which is money you’re throwing down the drain for no good reason.

Replace Your Electronics

Last but not least, boosting your home’s energy efficiency is also the perfect excuse for investing in the latest toys and gadgets. From computers to TVs to stereo systems to kitchen appliances, huge advances in energy efficiency are being made every year. So if there’s something you’ve not replaced for a while, it could be putting a drain on your resources…and therefore warrants replacing.

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Other Finance News

Trump’s America: Financial Failure or Flourishing?

President Donald Trump is no stranger to claiming credit for just about anything that pops into his head. Two examples of which being the strength of the stock market and the US economy in general – both of which are doing pretty well.

As far as he’s concerned, the country’s entire economy was on the brink of disaster when he (unexpectedly) won the post of POTUS. He’d make no secret of his disdain for former President Barack Obama, suggesting that his own appointment was the best thing to happen to the US economy in recent history.

Not to mention, necessary to avoid economic ruin.

“When I took over this economy, this economy was ready to crash,” he said in an interview last October.

“We were at 1% GDP. Now we’re at 4.2%. It was ready to crash. It was the worst. If you look from Depression — from the Great Depression — it was the worst recovery in the history of our country.”

Unsurprisingly, his remarks don’t paint a particularly accurate picture. On one hand, he’s right about achieving a 4.2% domestic product growth rate for one quarter in early 2018. Nevertheless, the quarter he was actually referring to saw a somewhat lower rate of growth at 2.6%. And Obama didn’t exit his presidency with a GDP rate of 1% – it was 1.6% for the year as a whole and 1.8% for his final quarter.

As usual, somewhat inflated and deflated numbers to support his argument.

Nevertheless, he continued (in an entirely different interview) to suggest that his efforts are driving the United States into a more prosperous and powerful financial position than ever before.

“We’ve probably had the greatest first two years of any President in our history in terms of what we’ve accomplished with employment, with GDP, with everything,” he stated with confidence earlier this year.

“Instead of being up almost 50% with the stock market, you would have been down 50%,”

Impressive figures, but massively over-inflated once again. For those who care to look at the actual numbers, the stock market is actually up approximately 23% since Trump’s appointment – nowhere near 50%.

Still, you can’t deny that a 23% increase is anything but positive progress. Back in 2016, Trump made a pretty clear promise to his would-be voters.

“We’re going to make America wealthy again,” he stated.

“You have to be wealthy in order to be great.”

But what he may have failed to point out is the way in which his subsequent policies would focus more on significant gains for the already-wealthy. The Trump tax cut was introduced as promised, which left some of the country’s richest individuals and most prosperous businesses even better off.

In the meantime, America’s middle classes have been dealt a hammer-blow.

Job growth has slowed significantly, and wages remain stagnant across much of the country. Farmers are suffering enormously as a result of Trump’s escalating trade wars, mass-closures are wiping out coal mines and strikes among educators are becoming more common.

If all this wasn’t enough, healthcare costs and prescription drug prices are skyrocketing, house prices are on the up and America’s student debt crisis is as healthy as ever.

On the whole, it’s estimated that close to 85% of all the benefits of the tax cuts introduced by Trump will ultimately benefit the nation’s richest 1%. So while the economy of Trump’s America may be flourishing in some ways, the benefits aren’t being felt by those who matter most – the average American household.

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Development Finance Mortgages

Development Finance vs Self-Build Mortgage

Major construction projects often call for equally major financial support.  Unless you’re already sitting on a stockpile of cash, you’ll need to enlist the help of a specialist lender.

In which case, you’ll be looking at a choice between two viable yet very different funding solutions:

Development finance or a self-build mortgage.

While both options could provide you with the funds you need to successfully complete the project, each has its own unique pros and cons. So rather than choosing at random, it pays to consider both options carefully and decide which works best for you.

Self-Build Mortgages

Examining self-build mortgages first, these specialist funding solutions are designed for lenders looking to build a property from scratch, extensively renovate a current property or demolish and rebuild a property.

One of the key provisos with a self-build mortgage is that the individual applying for the loan becomes the occupier of the property, upon completion of the project. As a result, the vast majority of self-build mortgages are provided in the form of a regulated residential mortgage. The difference being that unlike regular mortgages, the funds provided with self-build mortgage loans are released gradually as the project progresses.

For the typical homeowner looking to renovate, expand or rebuild their current property, a self-build mortgage could prove ideal. Likewise, anyone planning to build their own dream home from scratch could access the funds they need by way of a secured self-build mortgage.

Nevertheless, self-build mortgages are relatively limited in scope and attach very restrictive terms and conditions.

Development Finance

By contrast, development finance is far broader in both scope and flexibility.  Development finance is a dynamic funding facility for residential and commercial property developers, who intend to sell the resulting properties upon completion.

There’s no requirement for the borrower to become the owner-occupier of the property or properties being constructed. In addition, there’s also greater flexibility with regard to the types of properties being built and their intended purpose.

Along with new build properties, development finance can also be used to fund extensive renovation, extension and improvement projects. Development finance solutions are tailored in accordance with the unique requirements and financial circumstances of each applicant individually.

As development finance is geared towards developers building and ultimately selling properties, it isn’t a suitable funding solution for individuals planning to build homes for themselves.

Key Features of Development Finance

While self-build mortgages bear many similarities to traditional mortgages, development finance is an entirely different funding solution. Some of the most important features and characteristics of development finance include the following:

  • Flexible finance can be obtained to cover the costs of new property constructions, the refurbishment of existing properties and property conversions.
  • Borrowers can apply for development finance to assist with single properties and multi-unit developments.
  • Development finance is typically available from £500,000 and up, with no specific limitations imposed.
  • Most lenders will provide development finance to cover a maximum of 75% of the property’s gross development value.
  • Terms and conditions are highly flexible to accommodate the requirements and budgets of a diverse field of borrowers.

In Summary

Roughly summarised, self-build mortgage products are open to applicants who intend to build or renovate a property they will go on to occupy. With development finance, commercial property developers are offered financial support to fund more extensive projects for business purposes.

In both instances, the key to finding the best possible deal lies in comparing loans from as many specialist lenders as possible. Compare the market with the assistance of an independent broker, incorporating major High Street lenders and the UK’s most dynamic property finance specialists. Work out the costs of a mortgage using our UK mortgage calculator

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Secured Loans

The Rise of Secured Loans

Britain’s secured borrowing market has seen significant and on-going growth for several consecutive years. Particularly in the more specialist sectors of the secured loans arena, application volumes are peaking and showing no signs of abating.

But what exactly is fuelling this UK-wide secured loans increase? What’s behind the secured loans rise in both private and business borrowing circles alike?

Greater Availability

For one thing, brokers and lenders alike are gradually beginning to acknowledge the importance of diversifying their portfolios. 

Traditionally, secured loans have been seen as something of a last resort. In addition, credit scores have been considered the be all and end all by far too many lenders. The public has been crying out for more flexible and accessible funding solutions, which on the High Street at least have been thin on the ground at best.

Today, there’s a growing network of specialist lenders across the UK working hard to turn things around. From short-term bridging loans to subprime mortgages to development finance, the availability of diverse and dynamic secured lending products is at an all-time high.

The more difficult it becomes to qualify for a traditional High Street loan, the greater the number of applicants turning to the UK’s specialist lending sector.

Regulatory Changes

Of course, the supervision and control of the Financial Conduct Authority has also renewed confidence in a sector that was once viewed with scrutiny. Taking charge of the regulation of the entire secured loan sector, the FCA is committed to the implementation of on-going improvements for the benefit of the borrower.

The result of which is a secured loans market that’s significantly more transparent than it has ever been. Interest rates are plummeting, irresponsible lenders are being driven out of business and the market is booming as a result.

The Flexibility of Secured Loans

One of the most attractive characteristics of a secured loan is the fact that it can be used for just about anything. Traditionally, High Street lenders have offered a relatively limited portfolio of secured loans with very specific purposes in mind. Mortgages being a prime example – available exclusively for property purchases and subject to strict terms and conditions.

Even with all the collateral in the world and an enviable financial position, a poor credit history could still see applications rejected.

By contrast, the UK’s specialist lending sector focuses heavily on flexibility and accessibility. In terms of limitations, there aren’t any – secured loans are available to cover absolutely any investment or outgoing. Bridging loans in particular provide limitless security, which can be used for any legal purpose whatsoever.

In addition, new-generation secured loans are routinely issued with no credit checks or proof of income required. The only proviso is the provision of sufficient collateral to cover the cost of the loan – the rest is of little consequence.

For obvious reasons, this has come as a welcome lifeline for millions of businesses and households affected by imperfect credit. Specialist secured loan applications are considered by way of individual merit – not simply counted out of the running based on credit issues alone.

Low Interest Rates, Minimal Borrowing Costs

If all this wasn’t enough, there’s the added appeal of the lowest possible interest rates and unbeatable borrowing costs. As secured loans are issued against the value of the applicant’s property or assets, they’re considered comparatively low-risk credit facilities. The lower the risk on the part of the lender, the lower the resulting costs for the borrower.

Hence, in many instances where both secured and unsecured loan options are available, it can prove exponentially more cost-effective to go with the former.  Particularly given the speed and simplicity with which a secured loan can be arranged.

Accessing the best secured loan deals in the UK often means looking beyond the High Street – consult with an independent broker for more information.

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