a second approach
An increasing number of people in need of extra cash are turning to second charge bridging finance to purchase investment properties, inject capital into businesses, or make refurbishments in order to prevent disturbing their existing attractive mortgages.
Demand for second charge lending is set to continue to increase throughout the year. In a sustained low interest rate environment, it now often makes more sense for a borrower to release equity on an investment property by taking out a second charge, rather than the prospect of refinancing away from their current deal.
At mtf, we believe a second charge bridging loan is about empowering borrowers to enable them to take advantage of time-sensitive opportunities that can make or save them money.
As an example, mtf recently helped a client who required £2.5 million to redeem an existing second charge loan that was coming to the end of its term, on her £8.5m home. The client was part way through refurbishing an investment property but the process had been delayed. She didn’t want to remortgage as she intended to sell the investment property once the refurbishment works were complete and didn’t want to be penalised for early repayment.
In just 12 days, mtf provided a £2.5 million second charge bridging loan at 39% LTV. Interest was retained over 12 months, with no exit fees or early repayment charges. No personal guarantees were required.
Our bridging loan meant the client was able to redeem her existing second charge, giving her time to carry out the works in order to significantly increase the value of her investment property. The client will then sell the investment asset to exit the bridging loan, against a higher value.
Furthermore, the SME sector is largely underfunded. Business owners need more innovative options, tailored to meet their needs and one such source that has become a critical tool to fund the SME community, is bridging finance.
For example, mtf was approached by a broker whose clients were looking for £649,000 to purchase their business premises. The clients had been given a good deal by their vendor, but needed to act very quickly.
With only three weeks to complete the purchase, the borrowers opted for a bridging loan as their mortgage provider was unable to complete within the tight timescale.
In just 2 weeks, mtf provided a £649,000 bridging loan, secured by way of second charge, at 59% LTV, over the clients’ residential property.
By taking out a bridging loan, the clients had the funds to complete the purchase of the premises, where they had operated their business from for over 25 years. A 12-month term gave the clients plenty of time to arrange and secure a business loan with their bank, in turn settling the bridging loan.
A second charge bridging loan can be secured on all property types, including buy-to-let, residential and commercial assets, and typically has a 12-month maturity, unlike a secured loan which is a form of longer-term financing.
At mtf we welcome second charge applications and have recently launched a new 24-month second charge bridging loan product. We developed this product to meet with the increased demand for more flexible second charge criteria. As with all our products, no proof of income or personal guarantees are required.
Second charge bridging loans will continue to offer significant financial savings for a wide range of borrowers, not just those who may struggle to obtain finance through traditional routes.
If you have any questions or an enquiry you wish to discuss, please don’t hesitate to call us on 0203 051 2331.