T: 01565 654005 BOOK A CALL MESSAGE US

Bridging/Short Term Finance

Auction Finance up to 75% LTV

Valuation and solicitors instructed same day with a fast track legal process to reduce the stress. All the lender asks, is that you have completed one previous project.

Daily interest, no exit fees and some of the best rates in the market. Also covers light and heavy refurbishment.

Contact us for a quote.

Light Refurbishment Bridging on Property & Costs

Shawbrook initially launched this light refurbishment product to a limited panel including Searchlight.  Now, normally you would fund the costs out of your own money, which can limit the number of projects you do.

Shawbrook will provide additional borrowing as long as:

Maximum initial loan 75% of lower of the purchase price or value. The total loan including purchase is not higher than 85% of the initial purcahse price or 70% of the end value.

A recent example for an experienced developer.

Purchase Price £150,000
Costs to refurbish £45,000
End Value £260,000

What happened

Day 1 loan of £112,500 – 70% of the end value is £182,000 and 85% of purchase price is £127,500 so maximum total loan based on the lower figure is £127,500. Deduct the initial loan of £112,500 and the developer has an extra £15,000 from the lender towards their build costs. This was put towards another purchase which previously they could not afford.

Commenting on this significant development, Emma Cox, Sales Director, Shawbrook Commercial Mortgages;

“We have worked tirelessly over the past five years to improve this important element of our product offering, and 2018 represents a real success story for the Shawbrook STL range. The ability to borrow 100% of refurbishment costs under one facility can be critical for investors looking to add value and develop their portfolios, and we are delighted to be able to support this activity.”

“While the product range continues to evolve in response to market demand, we have managed to keep all the old benefits in place to help our brokers and their customers build for the future. The 0.25% discount remains available for repeat borrowers with no minimum interest periods or ERCs, and we are also pleased to retain a great deal of flexibility for borrowers with the maximum 24-month term providing time to refinance or sell.”

Refurbishment Loan with lender funding up to 100% of refurbishment costs

Criteria

Initial Loan 70% of the value
Refurbishment costs 100%
Gross facility up to 70% of end sales value
Loan size £250,000- £1.5m
Term – up to 18 months
Minimum value £300,000
Works lower of 50% of current value or £500,000
Experience essential

Suitable for

Extensions
Conversions
Planning
Permitted development
Heavy refurbishment
Structural works

Bridging Finance – How strong is your exit route?

Do all lenders care about the exit?

Not wanting to be too controversial but various cases have led me to the conclusion that not all lenders look in detail on how they are going to get repaid. I must stress it is some and not all.

Being the rare breed that I am of broker, landlord and experience of running a bridging company, the exit does concern me. Now three cases were all presented by other brokers to lenders with repayment coming from a remortgage. All had major holes in that strategy and the risks were never explained to the client by either the broker or the lender.

1. A six-month loan at a low rate when the client needs nine months. To extend costs far more than a nine-month term with another lender.

2. A remortgage to a limited company whose main director/shareholder had adverse credit as long as your arm but the broker put the exit down as a remortgage and the lender never checked.

3. A valuer saying there was asbestos in the property but no specialist report being requested.

4. A recent case has got me thinking about how little due diligence is done by some lenders on the exit. We have another broker introducing Steve to a bridging lender to convert a guest house into an HMO. The deal gets done, refurbishment goes to plan and after several weeks of the client not getting the exit I get the call to sort out the repayment. Steve meets the criteria of the HMO lenders.

I ask him about planning and he tells me it has established use. I say prove it as that’s what the lender will need. He then comes back to me and says it doesn’t have planning and has to apply for it. So he has spent his money on a property that has planning for a guest house. Now he admits he missed it but this was never discussed by the lender or the broker. Surely their solicitors knew as well?

What does that mean to the bridging lender? Well the cynic in me says another two-three months of receiving interest and the bigger cynic the possibility of default interest. Now I hope I am wrong but I can’t see any reason why the lender did not identify this and bring it to the client’s attention.

Now that’s four cases where their broker gave them a product that was never going to work. Clients weren’t aware of it and it has cost them all financially, never mind the stress and anxiety.

At Searchlight, we work on the exit first and if it can’t be provided by multiple lenders we won’t do the bridge.

Contact us now to see how we can help you as we don’t expect this product to be around for long

 

Searchlight Finance Limited is registered in England and Wales No.07929050 Searchlight Finance Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (http://www.fca.org.uk/register) under reference 743220. The FCA do not regulate Business Buy to Let Mortgages or most Commercial Mortgages and Bridging Finance. ICO Number Z3109319. Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.

Searchlight Menu