Here you’ll find news about MTF, as well as our thoughts on all things finance-related. As an award-winning provider of bridging finance loans, we always look forward to sharing exciting industry news with you.

Apply for a bridging loan today, or visit our testimonials page to find out what clients have to say about us.

 

How To Speed Up The Bridging Loan Process

Speed is critically important in bridging finance. It is what makes bridging finance a fundamentally useful tool for those who need to raise funds within a short time frame. The ability to receive funds within a matter of days could make all the difference when it comes to capitalising on an investment opportunity.

Depending on the regulatory status of the lender and each lenders’ own processes, the steps to obtaining a bridging loan may vary. Generally, once an initial application has been submitted, indicative terms will be issued for the borrower to agree. Lenders who specialise in quick bridging, like mtf, will aim to do this within a matter of hours.

Have basic information ready 

 The initial application requires some basic information including:

  • Personal details i.e. name, address
  • Information on the security asset i.e. value, existing mortgage amount and current mortgage lender
  • Information on the purpose of the loan
  • Information on the exit route- how you intend to pay the loan back

Instruct solicitors 

Before making an application, be realistic in judgement of timescales. Bridging finance is extremely time-sensitive, so all parties involved need to move swiftly. To avoid unnecessary delays, it is advisable that the borrower’s solicitor has experience dealing with bridging finance, so an application can be completed to meet the borrower’s needs, however tight the deadline. Many bridging loan lenders use a panel of pre-approved solicitor firms to help speed up a transaction.

solicitors

mtf work with a pre-approved panel of solicitors. Our panel firms are entirely independent from mtf, but all have experience with the bridging finance process and have already been checked to ensure they comply with our internal regulatory and customer care requirements. Any solicitors firm that you do intend to use must be verified by a lender as part of the loan application. Hence, having your solicitor approved and ready early on can certainly speed things up.

Get a realistic value of the property 

It is also prudent to take a realistic view of the value of the security asset. Checking websites such as Rightmove and Zoopla can give a good guide to the valuation of the property. A reduced valuation of your asset can act as a fatal blow in any bridging loan application.

property-surveyor

A lender will instruct their own RICS surveyor to appraise your property from their approved panel. This will be necessary to proceed with your application. Depending on the lender’s process, the cost of the valuation is payable by you up-front, or included in the entire loan.

If buying at an auction 

If you are using auction finance to buy a property, you can be extra prepared by having your application completed and indicative terms before the auction date. Auctions work by requiring you to pay a 10% deposit on the day that you purchase the property, and then you have 28 days to come up with the remaining 90%.

auction-finance

To speed up the funding process some lenders can pre-approve your loan. mtf can review your loan options at an early stage, prior to auction and provide you with indicative terms. This way you can go in to auction and bid with confidence, and if your auction is successful and you get the property at the right price, you know you already have the adequate finances in place so that a transaction can complete with minimum fuss and without delays.

Plan your exit 

The most important thing however, since a bridging loan is not intended to be used as a long-term method of finance, is to ensure you have a commercially viable exit route, either by the sale of an asset or until longer term financing is put in place.

Those who have carefully planned their project in terms of renovations, refurbishment and resale will be well received by the lender and there will be a better understanding of the loan requirements.

There are a number of situations where an applicant will be presented with a very narrow window of opportunity. For example, a borrower whose buy-to-let mortgage lender has let them down at the last minute, a landlord trying to secure a property at auction, those facing repossession or a business owner who has a tax bill to clear quickly.

As an example, mtf was recently approached by applicants who had exchanged contracts in 2013 to purchase an investment asset in Southwark, London, off-plan from a developer for £836,000.

As the development reached practical completion a Notice to Complete was served by the developer, with a strict 10-day time clause for completion, failing which the deposit would be forfeited, and the developer would be free to sell the newly completed property at a higher value on the open market.

Due to the time-sensitive nature of the loan, the applicants were unable to secure a BTL mortgage. Faced with roughly a week within to complete the purchase the applicants approached mtf. On receipt of the enquiry, we were able to give an immediate decision and issued the offer of loan that day. Our team worked around the clock to organise the valuation and to ensure the legal formalities were addressed.

With 2 days to spare mtf provided a £480,000 bridging loan based on an open market value of £836,000, with no exit fee or early redemption penalty.  What’s more, we managed not only to save the borrowers from losing the apartment, but equally losing their £50,000 deposit.

By taking out the bridging loan, the applicants were given the time and breathing space to obtain a buy-to-let mortgage at the right level.

At mtf, we haven’t forgotten that bridging finance is supposed to be quick and as hassle free as possible. We set a fast pace from the moment we receive an enquiry- this approach enables us to deliver funds at speed and with a minimum of fuss.  Click here for information on how our streamlined bridging finance process works.

Brokers confident for 2018

According to the results from mtf’s latest Broker Sentiment Survey, a majority of brokers are confident about business growth in 2018.

Some 68% of brokers believe overall market conditions will improve in 2018, a sea change in opinion from January 2017, when only 31% of brokers surveyed were confident about the year ahead.

Half of the 106 brokers surveyed said macroeconomic uncertainty would be the main challenge for UK financial services firms in 2018, while 28% cited the impact of Brexit negotiations, and 13% said the level of market competition would be the biggest challenge. Only 6% of brokers thought regulation would prove a challenge.

Despite this, demand for specialist finance is expected to remain strong, with 84% of brokers preparing for a further rise in bridging finance volume in 2018

after 73% of those questioned reported an actual rise in bridging loan volume in 2017.

Refurbishment was the main reason borrowers took out bridging loans in the last quarter of 2017 at 28%, followed by property purchases and funding development projects, at 19% each.

For the fifth consecutive quarter the South East saw the biggest demand for bridging finance in the UK during the fourth quarter of 2017, at 47% – a 1% drop on Q3.

The geographical spread of bridging finance demand continued in the last quarter of 2017, with brokers noting an increase in demand in Northern Ireland (4%), Scotland (3%) and the North East of England (3%).

After the challenges faced in 2017, it is encouraging to see that brokers’ confidence is strong as we enter the New Year. We’re delighted that brokers see the demand for a growth in bridging finance in 2018 and the reasons are simple, bridging loans provide a real-time solution to the funding gap that has developed as high street lenders come to terms with increased regulation.

We can continue to expect to see a substantial rise in the demand for bridging finance throughout the rest of the year. For more information or to discuss a new enquiry, contact the team on 0203 051 2331.

How Does a Property Valuation Work?

A property valuation is key to determine what level of mortgage you can obtain and how much you can borrow. Bridging loans are always secured and you are using the value of the property in order to borrow money for refurbishments, development or to purchase another property. Therefore, having an accurate valuation of the property is very important.

For mtf, a good valuation gives us peace of mind knowing that your property is in a reasonable state and will maintain its value if sold on the open market or rented out to tenants.

Before we proceed with a valuation, we must have offered you a decision in principle and you should have completed the necessary paperwork. We then instruct an RICS valuer to get in touch and make an appointment with you as soon as possible – with most valuations being arranged within 48 hours. For more information, you can read about our process here.

If you have recently had your property or flat valued by an RICS valuer, this will need to be validated within the last 3 and 6 months to decide whether another survey is warranted and whether this valuation firm can be accepted by mtf.

What does the surveyor do? 

The surveyor will carry out a series of checks to determine the value of the property, checking every single room and taking photos where necessary. Whilst the valuer will be able to get an idea of the place’s value quite quickly, they will typically go back and review all their information and provide you with a report and an official valuation within 72 hours (or sometimes longer).

There are several factors that the surveyor will look at including:

  • The age of the property
  • The condition – wear and tear
  • The size
  • Room layout
  • Fittings
  • Electrics and heating system
  • Storage space
  • Double glazing
  • Roads
  • Positioning of the house
  • Amenities like driveway and garden

The role of a proper valuation can also help you identify any issues with your building project that you may have overlooked. For instance, finding issues such as structural concerns, asbestos or dangerous substances can save you a lot of money down the line. However, your report from a surveyor will not tell you which repairs you need to carry out, but instead make you aware of these in terms of how it affects your property’s value. 

property-surveyor

Why do we use an RICS valuer? 

We only appoint RICS surveyors so that your valuation is carried out by fully regulated professionals who:

  • adhere to the ‘Red Book‘ valuation standards
  • are committed to openness and transparency
  • are experts in their field, delivering credible and high-quality reports.

 

property-valuation

How much does a property valuation cost? 

A property valuation typically used for a bridging loan starts at around £400. The pricing varies because the more expensive and typically larger properties require more work and investigating in order to carry out the valuation.

You are required to pay for the valuation of your properties upfront.

What else affects the value of the property? 

A key factor in the valuation of your property is what the other house prices are on the same road and in the area. This acts as a good benchmark for what people are prepared to pay in that location.

Other factors including the history of the area and whether it is located near good schools, low crime rates and a low risk of flooding can also contribute to a strong valuation. Some areas are up and coming, specifically places that are going through regenerations such as Tottenham and Shoreditch are likely to have properties that will maintain a good value or see significant growth.

Understanding the demand and desirability of the type of property is also important. For instance, the centre of London certainly has a high demand for affordable flats and a limited supply – and this will drive the property’s value higher.

Also, taking market forces into consideration, things like Brexit, interest rates, inflation and consumer confidence can also determine the value of a property.

However, based on the factors above, a property’s value can change within the space of a few months or years. A successful property developer will be able to identify growth and gaps in the market, being able to buy for cheap and sell for a higher price later on.

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.

property-conversion

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.

new-business-openFor 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.

Two-thirds of brokers see rise in bridging loan volume

Some 65% of brokers noticed a rise in bridging loan volume in the third quarter of 2017, an increase on 48% in the second quarter, according to our latest Broker Sentiment Survey.

rise-in-volumes

Bridging finance continues to plug a funding gap for borrowers that are struggling to obtain loans from mainstream lenders, which have implemented tougher restrictions.

The geographical spread of bridging loan demand also broadened in the third quarter and for the first time 9% of the 96 brokers surveyed cited an increase in demand in Scotland and Northern Ireland, respectively.  For the fourth consecutive quarter, the South East saw the biggest demand for bridging loans in the UK at 48%, although this represented a drop from 62% in Q2. The second highest area of demand was London, at 25%.

area-demand

For the fourth consecutive quarter, funding development projects was the most popular reason for taking out a bridging loan at 30%, followed by business purposes at 17% and refurbishment loans at 14%.

reasons-for-loan

However, some 69% of brokers said the bridging loan process took longer than it was 12 months ago.

is-process-longer

While 45% said it took under three weeks to complete a bridging loan, and 18% cited a mere 1-2 weeks, some 55% said it took in excess of 3 weeks.

time-to-complete-loan

34% suggested 3-4 weeks was the average length to complete a bridging loan, while 21% indicated that bridging loan cases generally took more than four weeks to complete.

Almost three-quarters of brokers surveyed blamed solicitors as the main reason for delay, followed by the valuer at 13%.

reason-for-delays

 

Bridging loans remain an important financial tool for borrowers and demand continues to grow. Speed has always been a vital element in bridging finance and it is important that solicitors understand what is required, so that bridging finance requests can be completed as quickly and accurately as possible.

There are some excellent firms of solicitors to choose from and many bridging loan lenders, like mtf, use a panel of pre-approved firms to help speed up a bridging loan transaction for an applicant.

At mtf, we take a fast, non-status based approach to lending going back to the traditional roots of bridging finance.  Our approach is streamlined; no application forms, no upfront fees, offers in principal within 12 hours of enquiry and valuations within 48 hours.

For more information, or to speak to a member of the team, call us on 0203 051 2331.

BRIDGING TRENDS: bridging loan volume dips in Q3 2017

Bridging loan activity dropped slightly during the third quarter of 2017, according to the latest Bridging Trends data.

Data from Bridging Trends revealed contributor gross lending fell in the third quarter to £142.75 million, down 4.9% on the second quarter (£150.07m) but up 2% on the same quarter last year (£140.49 million).

Bridging Trends, a quarterly publication by bridging lender mtf and specialist finance brokers Brightstar Financial, Enness Private Clients, Positive Lending, and SPF Short Term Finance, launched in 2015 to monitor the general trends in the bridging finance market.

First charge lending remained solid in Q3 at 82%, indicating consistent investment in residential properties-to-let.  Whilst second legal charge lending increased for the second consecutive quarter rising to 18%, from 17.2% during Q2 2017.

Average LTV levels hit 49.6% during Q3 2017, up from 45.4% on the previous quarter, suggesting continuing investor confidence in the market.

Average monthly interest rates across 1st and 2nd charge lending decreased to 0.82% from 0.84% in the previous quarter as competition amongst lenders forced rates down.

42.9% of transactions were regulated in Q3, down from 46.1% in the previous quarter.

However, unregulated bridging loans continued to dominate the landscape, with the number of unregulated loans climbing to 57.1% of all lending- up from 53.9% in Q2.

The average completion time on a bridging loan application in Q3 increased by 4 days, as service and resource levels were impacted by annual leave.

Mortgage delays were the most popular reason for obtaining a bridging loan in Q3 2017, contributing to 31% of all lending and reversing the second quarter blip where refurbishment purposes exceeded mortgage delays.

Refurbishments were the second most popular reason for getting a bridging loan at 23%. Business Purposes was third at 13%- up from in 11% in Q2.

The average term of a bridging loan was 12 months during the third quarter, up from 11 months in the previous quarter.

To view Bridging Trends archives, please visit www.bridgingtrends.com

bridging-trends-q3

Majority of property investors not aware of new BTL rules

62% of property investors revealed they were not aware of the introduction of the new PRA rules, MT Finance’s Q3 Property Investor Survey showed.

The new buy-to-let rules from the Prudential Regulation Authority (PRA), which is part of the Bank of England (BoE), demand a tougher lending stance on landlords. As of 1st October, landlords with four or more mortgaged buy-to-let properties, will now have to provide information to the new lender on every property in their portfolio when applying for a buy-to-let mortgage- even if the mortgage application is for just one of them.

Under the new guidelines, lenders will have to take a landlord’s experience, their full portfolio, their rental income, any outstanding mortgages and their assets and liabilities into account. This will mean borrowers will see significant delays because of greater volume of documentation required and elongated underwriting processes. It may also mean that some landlords are turned down for finance because they don’t have enough equity in their whole portfolio. This can severely hinder those requiring fast access to funds.

31% of property investors surveyed believe they will be negatively affected by these new rules, whilst 10% are unsure.

Over half of property investors surveyed are not sure if the new rules will mean they have to sell their investment assets as a result of the new rules.

When asked what is the biggest challenge currently facing them,  the majority (28%) cited accessing funding as the biggest challenge, followed by the tax changes at 26%.

We know the new rules may cause some volatility to the market but the positive news is that it is absolutely business as usual here at MT Finance. Our bridging loans do not fall under the remit of the tougher landlord affordability rules. Whether you’re a first-time investor or a portfolio landlord, as a non-status lender, we can continue to be flexible in our approach by providing fast and affordable specialist finance, for terms as long as 24 months.

Bridging finance can present a real-time funding solution to property investors facing the growing number of barriers and restrictions, by gifting them the ability to buy quickly when opportunities arise. It has become the perfect tool for borrowers purchasing buy-to-let investments, particularly in a rundown state, and making the necessary refurbishments, before putting them on the open market for sale.

As an example, MT Finance was approached by an investor who required a bridging loan on an investment property in Covent Garden, which had an open market value of £950,000. He wanted to redeem an existing first charge with his mortgage lender and then refurbish the property before putting it up for sale. We provided a £672,000 bridging loan secured by way of a first charge, enabling the client to clear his mortgage and use the remaining funds to remove a partitioning wall and false ceiling to open up the property. Once the refurbishment works are complete, the investment property is estimated to fetch a price in the region of £1.4m, so the client will be able to move on to his next project with a substantial profit.

MT Finance remain committed to supporting property investors and is maintaining in full our existing suite of bridging loan products and pricing. We are still able to make lending decisions within hours of initial enquiry and release funds in less than a week, preventing landlords from missing out on time-sensitive opportunities that come their way.

What’s more, as a non-status lender, we don’t require evidence of credit history, accounts, proof of income or personal guarantees. Instead, we look at the property and listen to the rationale behind a loan when making a decision.

Criteria highlights:

  • Loans from £100k -£5m
  • Commercial, semi-commercial and residential property
  • 1st charge non-status loans from 0.84%
  • 2nd charge non-status loans from 0.95%
  • Up to 70% LTV
  • Terms from 3-24 months
  • No Early Repayment Charges, no exit fees
  • No credit scoring
  • No personal guarantees required

If you have any questions or require further information, please do not hesitate to give us a call on 0203 051 2331. The team are on hand to discuss any enquiries you may have. Alternatively, you can email us at enquiries@mt-finance.com

 

Government is not doing enough to support the property market, say brokers

According to the data from our most recent quarterly Broker Sentiment Survey, 82 per cent of brokers do not think the Government is doing enough to support the UK property market.

govt-doing-enough

 

When asked what changes the Government could make, over half (59 per cent) of brokers said scrapping the 3 per cent stamp duty surcharge would better support the property market. Followed by building more affordable housing at 28 per cent.

Govt-support

 

Despite the unexpected election result that lead to a hung parliament, the majority (60 per cent) of the 92 brokers surveyed revealed they backed the Conservative Party. 21 per cent of brokers voted for the Labour Party.

party-voted-for

 

43 per cent of brokers said economy and taxes impacted their vote the most.

policies-impacted

 

Some 48 per cent of brokers noticed a rise in bridging loan volumes in Q2, compared to Q1- down from 59 per cent in the first quarter. 33 percent said loans volumes had declined.

rise-in-volume

 

The South East saw the biggest demand for bridging finance in the Uk, at 62 per cent, up from 40 per cent in Q1 2017. The second highest area of demand was the Midlands at 24 percent. Only 9 per cent of brokers reported a rise in London- down from 30 per cent in Q1.

area-most-demand

 

For the second consecutive quarter, funding a development project was the most popular reason for their clients taking out a bridging loan, at 24 per cent, followed by refurbishment at 19 per cent. reasons-for-loan

At a time of heightened uncertainty in the housing market stemming from numerous factors, brokers are exceptionally well placed to identify factors affecting activity. It is clear that stamp duty is having a negative effect, perhaps beyond what was anticipated, to slow the growth in prices by reducing transaction levels. This is borne out by the reduced number of brokers seeing a rise in lending volumes in London – the area most cited as feeling the effects of the stamp-duty ‘surcharge’.

The good news is that the market is responding by developing new opportunities, as more and more property professionals realise the potential of assets through refurbishment and ground-up development. Both of which mtf is here to fully support. For more information on how a bridging loan could help, call mtf on 0203 051 2331.

IN THE SPOTLIGHT: limited company product

mtf has launched a new loan product to cater for the major shift in the UK’s buy-to-let market as more landlords choose to set up limited companies in a bid to better manage portfolio assets, following recent changes to property tax.

While investing via a limited company is not a new concept, its use has majorly increased since Chancellor George Osborne announced that mortgage interest tax relief would be restricted to 20% instead of 45% for top rate taxpayers, from April 2017.

Landlords borrowing through limited companies can avoid the changes, instead paying corporation tax.

The limited company buy-to-let index from Mortgages for Business showed over half of buy-to-let lending in the second quarter of 2017 was provided to limited companies, the first time companies borrowed more per quarter than individual landlords, including for both purchases and remortgage transactions.

Despite the increase in limited companies, the number of mainstream lenders offering limited companies buy-to-let mortgages remains low. Moneyfacts data for the end of March showed only 14 lenders provided the option, out of a possible 77 lenders that offered any form of buy-to-let products.

At mtf, we understand the difficulties faced by property investors and our new short-term loan product is designed for all types of company landlords, in order to support this area of the market.

At mtf, we believe a bridging loan should be fit for purpose, shunning a one size fits all approach. We are here to work with you to get your loan completed in a matter of days. As a non-status lender, we can take a view on CCJs, defaults and arrears and we do not always require evidence of credit history, accounts or proof of income- instead we focus on the property and the client’s future plans.
limited-company

mtf Limited Company Product:

  • Loans from £100k- £5m
  • 1st & 2nd charges
  • Up to 70% Loan-To-Value
  • Terms from 3 months-24 months
  • Non-status, adverse credit considered
  • No credit scoring
  • No personal guarantees required
  • No exit fees / early redemption costs
  • Residential / commercial / semi- commercial / HMOs
  • Lend to offshore companieS

For more information, or if you would like to discuss an enquiry with a member of the mtf team, call us on 0203 051 2331. We are here to listen.

Property Investors want stamp duty surcharge scrapped

Three quarters of property investors said scrapping the additional 3% stamp duty hike on buy-to-let and second homes would improve conditions in UK real estate, mtf’s Q2 Property Investor Survey showed.

q2-image

 

The introduction of the 3% surcharge in April 2016 has severely limited investor appetite for buying properties with the intention of renting them out. It comes as the property market has slowed across the board amid other changes to stamp duty, including a hike on higher value assets.

The government introduced a series of changes to slow down an overheated property market and reduce the amount of buy-to-let investors.

Meanwhile, 25% of property investors called for a reversal on the changes to tax relief on buy-to-let mortgages. Those changes were introduced in April 2017 and have cut buy-to-let tax relief to 20% from 45%, for top rate taxpayers.

60% of those surveyed revealed they had been negatively affected by the Government’s reduction in mortgage interest tax relief.

mortgage-rates

However, landlords borrowing through limited companies can avoid the changes, instead paying corporation tax. Some 75% of property investors surveyed revealed they now own properties in a limited company.

how-many-properties-limited

 

In June’s general election, 60% of property investors voted for the Conservative Party.

party-voted-for

 

With 35% citing housing as the policy that impacted their vote the most, followed by the economy and taxes at 30% each.

policies-impacted

 

In total, 100% of those questioned said they felt the Government was not doing enough to support them.

govt-supporting-landlords

Property investors have been dealt some setbacks, impacted by changes to stamp duty and more recently, changes to tax relief. Despite the changes, many investors remain resilient and mtf is there to support them and fulfil their funding needs.

For more information on how a bridging loan could help, call mtf on 0203 051 2331 or fill in our contact form and a member of the team will be in touch with you shortly.

 

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