As economic uncertainty continues to escalate, the UK’s biggest banks are becoming increasingly inflexible. Strict lending regulations coupled with complex in-house policies are making it more difficult than ever to qualify for specialist funding on the High Street.
Property developers and real estate investors in particular are feeling the pinch. Potentially lucrative projects are being left in limbo, or in some instances failing to even get off the ground in the first place.
But this lack of flexibility and product availability on the High Street need not spell doom and gloom for investors and developers. It simply calls for a search for affordable funding beyond the High Street, which is where private lending comes into play.
A Rapidly Evolving Segment
Demand for the kinds of flexible financial services that simply do not exist on the High Street is being met by a rapidly expanding specialist lending sector. Across the UK, dozens of private lenders have gone into business to effectively (and in some cases literally) ‘bridge’ the gaps in the services provided by mainstream banks.
From bridging loans to auction finance to specialist development finance, it’s all available from an extensive network of private lenders.
What makes this specialist lending sector unique is how all applications for funding are assessed individually. None of the usual ‘binary’ application criteria apply – all requests are considered based on their broader merit.
This means that rather than being offered a limited range of off-the-shelf products, loans and development finance facilities are built from scratch to meet the exact requirements of the client. As a result, they get exactly what they need at a price they can afford, with terms and conditions that suit both the borrower and the lender.
The Advantages of Private Lending
Seeking support from a specialist lender (as opposed to a mainstream bank) can be beneficial in the following ways:
1. Flexibility – All aspects of the facility arranged can be tailored to meet the unique requirements of the applicant. This includes LTVs as high as 90% or more, a wide variety of repayment options (loan terms) to choose from and the option to ‘roll up’ interest into the final repayment.
2. Accessibility – None of the normal restrictions apply when seeking financial support from a specialist lender. Even with poor credit, a history of insolvency and/or no formal proof of income, it is still possible to qualify for flexible and affordable products like bridging loans.
3. Speed – With all required paperwork and documentation in place, bridging loans and development finance loans can be arranged within a few working days. On the High Street, the closest comparable products could take weeks (if not months) to underwrite.
4. Affordability – Interest rates and overall borrowing costs are always open to negotiation with specialist lenders. Some short-term facilities can be taken out from as little as 0.5% per month, with no initial arrangement fees, admin fees or deposit payments required.
5. Freedom – Importantly, specialist lenders place few (if any) restrictions on how their products can be used. While traditional banks limit their loans and mortgages to very specific purposes, similar products for specialist lenders can be used for any legal purpose.
It is also possible to request a decision in principle on a bridging finance or development finance application, without posing a risk to your credit score.
Far from a last resort, more businesses (and mainstream borrowers) than ever before are setting their sights on the UK’s growing specialist lending sector. With the support and representation of a skilled broker, a product search that goes beyond the High Street can pave the way for significant savings.
Not to mention, a far faster, easier and less stressful experience than applying for funding via conventional channels.
For more information on any of the above or to discuss property development finance in more detail, contact a member of the team at UK Property Finance today.