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.

 

All change for HMO licensing rules

The Government has introduced new rules regarding licensing of houses in multiple occupation (HMO) that will mean a substantially higher number of properties will require a licence.

From 1st October, an HMO licence will be needed for properties occupied by five or more people from two or more separate households, regardless of the number of storeys.

Landlords will have to obtain a mandatory licence where their property meets the following criteria:

building

  • is occupied by five or more persons
  • is occupied by persons living in two or more separate households; and meets-
  • the standard test under section 254(2) of the Act;
  • the self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats; or
  • the converted building test under section 254(4) of the Act.

The new HMO licensing requirements spell big changes for some landlords, with the RLA estimating that an additional 177,000 properties will become subject to the mandatory licensing. So, do take time to read the full order to consider how this may affect your portfolio.

In addition to extending the licensing requirements, the government is also proposing the introduction of a minimum room size for bedrooms in licensed HMOs. The new guidance will recommend floor space be no less than 6.51 sq m for single use and 10.22 sq m for two adults sharing.

The new law is likely to affect how landlord’s finance HMOs. If you are affected by the room size requirements or want to either convert properties into HMOs or to purchase them, and need to do this quickly, bridging finance could be an effective means of raising funds.

The main benefits of bridging finance are the speed and flexibility the product offers. A bridging finance lender has the ability to provide a large amount of funding, in a short time-frame- typically a bridging loan on an HMO can usually be secured within 15 working days.

At mtf, we allow our clients to acquire finance from day one, before applying for planning permission, allowing for shorter turnaround times which could prove invaluable to those landlords needing to act quickly.

As an example, we were recently approached by a client looking to raise £215,250 to purchase a property of 10 flats and carry out some refurbishment works. The client needed to act quickly so not to miss out on the opportunity. In just under 3 weeks, mtf provided a £214,000 loan at 65% LTV, based on an open market value of £330,000. Interest was retained at 0.9% per month, over a 12-month term, with no exit fees or ERCs. No personal guarantees were required.

Our bridging loan gave the client the funds to buy the property quickly and the 12-month term bought them the time needed to carry out the works to significantly increase the rental value of the property. The client then refinanced out of the bridge with a traditional buy-to-let mortgage from a bank, against the higher value.

Our HMO criteria:orange-buildings

  • 65% LTV on purchase or refinance
  • Rates from 0.85%
  • Terms from 3 – 24 months
  • Individual shared self-contained flats/ converted flat
  • Adverse credit, CCJs and arrears considered
  • No upfront fees/ no exits fees/ no ERCs
  • No personal guarantees required

If you have a property in mind or are looking to complete soon, get in touch today to see if we can help.

Gareth Lewis joins mtf as Commercial Director

 

mtf has appointed Lewis as its new commercial director. Lewis will be responsible for overseeing product development and identifying new propositions to help further accelerate our expansion.

mtf is delighted to announce that Gareth Lewis, previously director of bridging at Precise Mortgages, has joined the mtf team.

Lewis has more than 14 years of experience in the short-term lending market, having previously held roles at Tiuta and Cheval Property Finance, before joining Precise Mortgages in 2011.

Director of mtf, Joshua Elash, comments:

“We are delighted to welcome Gareth into the mtf family and are excited about the experience and expertise he brings with him. As we continue to grow and develop, Gareth will play a big part in our ongoing project of making mtf the market-leading specialist lender.”

Gareth Lewis, commercial director at mtf, comments: 

“The opportunity to join mtf at this exciting time in its growth was an easy decision to make. I have known Joshua, Tomer and the team for a number of years, and have always admired the way they have worked and built their reputation within the short-term market. I look forward to adding my experience to the team to help us evolve further.”

We’ve moved!

We are delighted to announce that our team has moved to a new and much bigger space, in Holborn.

We have spent the last 3 years at Oxford Circus but when we first moved in, there were six of us and plenty of room- now our team has grown considerably more and space was getting a little tight. The new office will allow us to accommodate our increase in capacity and ensure we continue to provide an excellent service to our introducing brokers and to our clients.

It has been an exciting few years for mtf, and we look at this new location as the start of another chapter in our company’s history.

We’ll be working on getting settled in, so please note mtf will close an hour early tomorrow at 4:30pm.

Please make a note of our new address for all future correspondence:

9th Floor
Holborn Tower
High Holborn
London
WC1V 6PL

We look forward to welcoming our clients and industry colleagues over the coming months.

 

 

Investors tap alternative funds in BTL struggle

Property investors are opting to raise alternative finance after struggling to secure buy-to-let mortgages, according to the results from our latest property Investor Survey.

57% of 84 property investors surveyed struggled to secure a BTL mortgage in the past 12 months, with 62% citing affordability criteria as the primary barrier to mainstream funding, followed by age restrictions at 20% and insufficient deposit capital at 18%.

Yet, 43% surveyed filled the funding gap with other sources of liquidity, as 40% of those opted for secured loans and 30% raised bridging finance.

When asked what could mainstream BTL lenders do to improve, 57% of respondents said a more flexible approach to lending was key.  29% said a reduction of processing times would be the best improvement, while 14% said offering better rates would help greatly.

 

The results from our Q1 Property Investor Survey reflect the impact of stricter affordability and stress testing from lenders on professional property investors’ ability to obtain mainstream funding. However, specialist lenders are stepping in to meet the needs of borrowers and fill the liquidity gap.

For more information on how a short-term loan could help you purchase an investment property, call mtf on 0203 051 2331 or send us a quick enquiry.

Bridging loan volume soars in Q1

Bridging lending hit highest level in the first quarter, according to the latest Bridging Trends data.

Bridging loan volume peaked at £154.02m in the first quarter of 2018, up almost a third compared to £118.79m for the same period last year, as demand for short-term finance continued to grow.

The year kicked off to a strong start and at £154.02m, the market experienced the highest volume recorded since Bridging Trends launched in 2015, almost doubling £80.47m of lending during Q1 2015.

Prior to Q1 2018, volume peaked at £150.07m during the second quarter of 2017.

Bridging Trends, a quarterly publication by short term finance provider mtf and specialist finance brokers Brightstar Financial, Enness, Positive Lending, and SPF Short Term Finance, launched to monitor general trends in the UK bridging finance market in a bid for greater transparency.

For the third consecutive quarter, mortgage delays were the most popular reason for obtaining a bridging loan, accounting for 24% of all lending.

For the first time, auction purchases were the second most popular reason for getting a bridging loan at 20% – up from 4% during the same quarter last year, as an increasing number of people benefitted from fast access to capital. Refurbishment was the third most popular reason for obtaining a bridging loan during the first quarter at 18%.

A completion time of 48 days during Q1 2018 was also lower than an average completion time of 50 days during Q1 2017.

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

Average monthly interest rates remained at 0.83% for the second consecutive quarter and were 0.83% during the same quarter in 2017. Average Loan-To-Value (LTV) levels increased to 49.1% in Q1 2018, from 46.2% during the Q1 2017.

Regulated bridging loans increased for the first time since Q1 2017, with the number of regulated loans conducted by contributors increasing to 43.7% in Q1 2018, compared to 42.6% during Q4 2017.

First legal charge lending increased to 83.7% of all loans during Q1 2018, up from 80.3% in the fourth quarter. Meanwhile, second charge loans increased to 16.3% compared to 13.4% during Q1 2017.

Key data points from Bridging Trends in Q1 of 2018 are as follows:

  • Contributor lending reaches record high at £154.02m
  • Bridging loan demand peaks for auction purchases
  • Average monthly interest rate holds steady at 0.83%
  • Regulated bridging loans increase for the first time in a year

Joshua Elash, director of bridging finance lender, mtf, comments:

“It is particularly interesting that pricing has remained stable, despite an increase in regulated lending. This suggests that the recent downward pressure on rates might be easing and in the unregulated space, going the opposite way.

“Also, particularly interesting is the increase in bridging loans for auction purchases, considering the otherwise quiet property market, where transactional volumes have been adversely impacted by recent changes to buy-to-let income tax treatment and exorbitant increases in stamp duty.”

Tomer Aboody, director of bridging finance lender mtf, comments:

“Bridging volume has peaked to its highest level as the product becomes an increasingly mainstream financial tool. This is good news for borrowers that are able to access fast and vast pools of capital to fulfil their short-term funding needs as well as a growing number of investors attracted to the space.”

Chris Whitney, Senior Broker at Enness Commercial, comments:

“We’ve undoubtedly seen an increase in volume for bridging finance, but I also wonder if the breadth of lending that specialist lenders now provide is a contributory factor. For example, by definition, bridging loans are a short-term finance facility. However, that definition is now being stretched, with bridging lenders often able to offer facilities for up to two or even three years now.

“Lenders are also offering loans for more varied purposes, like ground-up development. We now even have Sharia-compliant facilities in our toolbox, allowing us to cater for a wider audience. Therefore, the increase in lending perhaps results from there being more things you can ‘do’ with bridging.

“I also think much of the increase in volume is outside of London and the South East, with other areas of the UK playing catch up from previous years. Again, this is because lenders are widening their nets, working across the UK and lending into the Republic of Ireland, Northern Ireland, Scotland, and so on.

“Ultimately, we may soon need to be having a conversation about what constitutes a bridging loan, in order to gain true insight into what the market is doing.”

To view the Bridging Trends Q1 2018 infographic, please visit www.bridgingtrends.com

Bridging loan volume rises as competition across the sector increases

According to the results from our latest Broker Sentiment Survey, bridging loan volume rose by almost a third in the first quarter of 2018 as demand for short term finance remained strong.

Some 30% of the 119 brokers surveyed experienced a rise in bridging loan volume, with the biggest demand coming from the South East at 50%, up from 47% in the last quarter of 2017. The second highest area of demand was the Midlands and Scotland, both at 15%. Only 10% of brokers said they’d seen the most demand in London in Q1.

Demand for alternative finance and an influx of cash into the space given the comparative attractive yields on offer has prompted new borrowers, investors, lenders and brokers to the market, facilitating its growth and continued acceptance into the mainstream as a viable financial tool. As such, some 37% of brokers surveyed cited competition as a key issue facing the bridging finance sector during the first quarter of 2018.

Interest rates and pricing emerged as most important when choosing a bridging finance lender at 39%, while 33% of respondents said flexibility was a key issue. Some 26% cited speed of completion as paramount. A mere 2% said an existing relationship with a lender was the most important factor.

42% of brokers would like to see higher Loan-To-Values (LTVs) on offer in the bridging finance sector, while 27% of brokers want greater flexibility on commercial lending and 26% want faster turnaround times. None of the brokers surveyed felt the need for lower rates or further transparency.

The most popular reason for taking out a bridging loan in the first quarter was to fund a development project at 27%, up from 19% in the fourth quarter of 2017. The purchase of an investment property was the second most popular reason at 24%, followed by refurbishment at 21%.

The feedback from brokers points to a strong need for specialist lending, particularly from developers who continue to support the housing market by providing further supply to meet the ever-constant demand. Bridging finance is increasingly being used as a viable financial tool to provide real time funding to plug any gap before longer term finance can be put in place.

mtf Named Bridging Lender of the Year at the Property Wire Awards

property-wire-awards

 

On Friday, mtf won the award for Bridging Lender of the Year at the Property Wire Awards 2018. The award was presented by Martin Roberts, presenter of the BBC One property auction series, Homes Under the Hammer, at Eight Members Club in London.

The Property Wire Awards are brought to you by the team behind the premier global property news service: Property Wire and are an opportunity to celebrate the hard work that has been going on in the property industry, rewarding excellence and looking at the champions of the industry today and in the future.

mtf are honoured to have been acknowledged with such a prestigious award and we would like to thank all those who voted for us! We greatly appreciate your continued support.

MTF 3 times winner of Business Moneyfacts Award for service excellence

Last night, mtf once again won the award for Best Service from a Bridging Finance Provider at the Business Moneyfacts Awards 2018. The prestigious accolade was presented by Claudia Winkleman, at the Lancaster London Hotel.

This is the third time mtf has won this award, having previously scooped the award for Best Service from a Bridging Finance Provider in 2017 and in 2014. It is also the sixth accolade we have received in recognition of the service we provide to our clients and introducing brokers.

Providing an excellent service is at the heart of our business model. mtf is committed to building strong relationships and delivering the very highest standards of service, and we are honoured to have been acknowledged with such a prestigious award as a result of votes cast from our peers in the UK finance industry.

On behalf of the whole team here at mtf, we would like to thank all those who voted for us! We greatly appreciate your continued support.

mtf would also like to extend its thanks to the team at Business Moneyfacts for hosting an exceptional celebration- we had a great night!

The difference between leasehold and freehold

 The use of bridging finance will typically involve the purchase of a property and as a result, it is very important to know the difference between leasehold and freehold. Whether the property is leasehold or freehold will have a notable impact on the running costs of the property, the ability to make changes to it and how easy it is to re-sell.

leasehold-vs-freehold

What is a freehold? 

A freeholder is someone who owns the property and land outright. This person can therefore decide whether they want to make changes to it and do not require permission from anyone else (except the local council). It also means that they are responsible for any maintenance and must pay for things like keeping up their exterior, driveway and garden. Most homes in the UK are under a freehold and the ones that are leasehold are typically under some form of shared ownership scheme.

To recap, a freeholder:

  • Owns the property and land outright
  • Can make changes at their own will
  • Is responsible for maintaining the property, land and garden

What is a leasehold?  

A leasehold means that you own a property for the length of the lease agreement which can be anywhere from 40 years to 999 years. Whilst you have a mortgage and have purchased the property, you still cannot make changes to the property without permission of the freeholder. This could be an individual proprietor or a management company.

Most flats and maisonettes in the UK fall under leasehold which is why it is common to have one communal area, area for waste disposal, shared driveway and garden which is covered in the service charges. You are also required to pay ground rents which as it sounds, is for renting the ground and the cost of this has increased significantly over the last few decades. In fact, research shows that the cost of ground rents is doubling every ten years and the average household is paying £200 to £400 per year. (SOURCE: THE GUARDIAN)

If you are looking to make any additions or renovations to the property such as removing any walls, adding a conservatory or even adding an air conditioning unit, this must first be approved by the freeholder. Plus, the freeholder has the right to charge you for simply making a change to the original property. Some freeholders charge money for just responding to requests to make changes and some will charge hundreds or thousands to make a change go ahead.

One of the biggest debates you can have is that a freeholder may reject your right to have pets in the building. Despite owning the property, the freeholder has the final say as to whether your cat or dog can stay in the same residence. This will be outlined in the lease.

To recap, a leaseholder:

  • Only owns the property for the length of the lease agreement e.g 99 years
  • Cannot make changes without the freeholder’s permission
  • Will usually pay service charges to maintain the area
  • Needs permission to have pets

Why does the length of the lease matter? 

Mortgage lenders usually need a lease to run for 25 to 30 years beyond the end of your mortgage. So, if you have a 25-year mortgage, the lease needs to have at least 50 to 55 years before it ends. Subsequently, they say that it may be difficult to sell a property if the lease is less than 80 years because lenders will not give a mortgage on it. Therefore, it can be worth considering how many years will be left on the lease when you plan to sell it.

If you have been living in the property for more than 2 years, there is always the option to extend the lease by 90 years and there is usually a cost for this. If you cannot agree on cost with the freeholder or you believe that you have been overcharged, you can appeal to the Leasehold Valuation Tribunal.

Can I buy the freehold on a leasehold property 

Yes, you may be able to gain the elusive freeholder status by buying the property outright known as ‘enfranchisement’.

Although the process can involve complex legal procedures and may be costly, it gives a lot of benefits to you as a homeowner, giving you savings on future ground rents, service changes and the freedom to make changes to your property.

Certainly if you live in a block of flats or small development, there is an opportunity to come together and share the costs of the freehold. It means that you can extend your leasehold for 999 years and only have to pay the legal fees, potentially saving you thousands.

Why is this important in bridging finance?

Whether the property is leasehold, or freehold is very important when purchasing a property. If you require bridging finance in order to purchase and develop the flat or home, you need to consider the freedom to make changes to the house and also any additional running costs.

If the ground rents and service charges are high, property owners/ lease holders  need to factor these costs in every month in addition to your rent.

Above all, if you are looking to make changes to a number of flats, you may have to budget additional costs to request these changes. Not only may it cost £10,000 or £20,000 to do an extension, but your freeholder may charge you thousands of pounds just to make the changes.

Finally, the time on the lease will be important when trying to resell the property. In which case, you may have to extend the lease which may cost anywhere between £5,500 to millions of pounds, depending on the property and where it is located.

A bridging loan with mtf can give leaseholders crucial access to finance when they are looking to extend a lease and improve the value of their investment property, preventing them from having to sell at a heavily discounted price.

As an example, mtf was approached by a client was looking to raise funds to extend a lease on an existing property and put down a deposit on an additional investment property. The client had struggled to get financing from a majority of lenders as there was a short timeframe of seven years left on the lease.

mtf-small-web-banner

We provided a £650,000, 12-month bridging loan, based on an open market value of £1 million. The process to extend the lease then commenced, with further funds provided during the term so the client could purchase a long lease and increase the value of the property.

By extending the lease the client was able to secure a long term buy-to-let (BTL) mortgage. The client was also able to purchase the additional investment flat.

If you would like to speak to a member of the team about how a bridging loan could help- call 0203 051 2331 or email us at enquiries@mt-finance.com

How to apply for a short-term loan

mtf specialises in providing fast access to funds with the average bridging loan completed within 2 to 3 weeks of starting an application.

To get started, you can make an application online and provide a few simple details. We do not require you to fill in any long forms and we can give an offer in principle simply by exchanging details by email or phone.

Information you will need:

  • Name
  • Contact details
  • Property address
  • Loan amount required
  • Your plans for the project
  • Confirm whether it is a first or second legal charge

As a non-status bridging lender, we do not run any credit checks as part of our application or eligibility criteria. We will take a view on CCJs, defaults and arrears and we do not always require evidence of trading history, accounts or proof of income. Instead, we prefer to see the potential value of your property and what your plans are in order to make our lending decision.

The offer in principle

An offer in principle (OIP) lays out the basic terms of the loan, stating that we will agree to lend to you at a specific rate and for a specific duration provided that your information adds up i.e the property and the valuations are accurate.

We aim to send you the office in principle within two hours of hearing from you and the initial plans of your project. The OIP needs to be signed on each page in the bottom corner, and on the last page in the box provided and sent back by email, fax or post. As soon as we receive the signed OIP we will provide our bank details for payment of the valuation fee.

offer-in-principle

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.

The valuation and how it works

As soon as we have received your payment for the valuation, we appoint an official RICS valuer to arrange a time to carry out the valuation of your chosen property. This is usually within the first 48 hours and to maintain a speedy process, our panel valuers are instructed to produce reports within around 72 hours.

If you have recently had your property or flat valued by an RICS valuer, this will need to be validated within the last 3 months. Every firm used needs to be accepted by mtf – so we will let you know if this is sufficient or another valuation is required.

property-valuation

The valuation or survey will consider several aspects of the property including the age, the area, its condition, size, fittings, positioning and potential for add-ons. In addition, the role of the surveyor is to highlight any potential issues which could delay or impede your plans for development such as planning permission or toxic materials. You can read our guide here on how a property valuation works. 

Instructing solicitors

Whilst the application is taking place, we will request your solicitor’s details so that we can send them our checklist of requirements. When the valuation report arrives, and the report is eligible to proceed, we will get in touch with your solicitor to issue the mortgage deed for signature.

You will need to meet with your solicitor in person to sign the mortgage deed and provide certified copies of your proof of ID (one piece of photographic and two pieces evidencing your address in the last 3 months e.g council tax bill, bank statement, utility bill).

Fund are released

Finally, as soon as our solicitors receive the requested documentation from your solicitors, we are ready to go, and funds are released to you. To make an enquiry, contact us today.

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