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

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

 

Property Investors Remain Resilient

A third of UK property professionals are set to expand their portfolios in 2018 as appetite for opportunistic deals continues, remaining resilient despite a backdrop of increased challenges.

We polled 109 property professionals as part of our research into the future performance of the UK property sector. Some 33% of investors planned to increase their portfolios, while 50% said they planned no changes in 2018. No-one questioned planned to reduce their exposure to the UK property market.

Of the 33% looking to expand their portfolios, 60% are looking to buy in the South East, compared to 20% that said they were looking to buy in London, as investors look to diversifying their portfolios geographically to broaden outside of the more expensive Capital.

The latest forward-looking results are encouraging especially as 40% of respondents don’t think conditions for landlords and property investors will improve in 2018.

2017 was a challenging year for property investors in the UK, with plenty of significant changes to get to grips with. When asked what had been the biggest challenge for landlords and property investors last year, 43% cited an additional stamp duty charge of 3% when buying an investment property.

Economic uncertainty was the second biggest challenge at 21%, followed by new affordability rules at 16%. Some 15% said accessing funding was the biggest challenge while only 5% cited the stripping back of tax relief.

During 2017, some 45% of those questioned bought residential properties as investments compared to 21% buying foreign properties. 11% bought commercial properties as investments.

While there is continuing uncertainty, particularly over how the Brexit negotiations will unfold, UK property investors remain resilient. The fact that property professionals have continued to invest in the UK, despite the uncertainty and numerous challenges, bodes well for the future of the market. Bridging finance is there as a tool to help investors fulfil their requirements when looking to purchase properties quickly and increase their portfolios. While banks have been scaling back, against a backdrop of increased regulations, bridging finance is more important than ever in providing much needed capital for investors to fulfil their funding needs.

For more information on how a bridging loan could help, call mtf on 0203 051 2331.

The Benefits of Bridging Finance

There are several benefits of bridging loans over other sources of mainstream finance. Most clients are attracted by the speed, flexibility and ability to break property chains when raising finance for a property purchase or business purpose.

mtf has developed a strong reputation in the industry for delivering funds at speed at sensible rates which are clearly transparent to the customers. We have been recognised by a number of industry awards including Best Service from a Bridging Finance Provider at The Business MoneyFacts Awards 2017.

Below we list the main benefits of using bridging finance from mtf.

Avoid property chains

property-chains

Property developers and investors are able to use bridging to bypass the traditional property chains associated with a typical mortgage. Applying through a mainstream bank can take at least 6 weeks once you have completed the relevant paperwork and received sign-off. For those savvy investors looking to purchase a property within a limited timescale, bridging loan products gives them the opportunity to access funds within 2 to 3 weeks or sooner, without the long traditional checks associated with a bank mortgage.

Access to fast funding

mtf understands that purchasing a property can come with a deadline and the need to complete before someone else does. There are some transactions which are very time sensitive, such as the case of auction finance where you have a 28-day period to provide the outstanding funds for the property.

We have a streamlined process meaning that we have a shorter application form than most bridging lenders and have our own panel of solicitors and recommended surveyors to value your property and complete the transaction as soon as possible.

Transparency

mtf is passionate about giving our clients full transparency from start to finish. The indicative terms and loan agreement clearly show how much you are borrowing, how long for and the rates charged.

We believe that a bridging loan should either make the borrower money or help save them money – which is why we offer flexibility with no early redemption penalties or exit fees as part of our loan offering.

transparency

No credit checks

As a non-status lender, we do not use credit checking to determine your eligibility. Whilst most high street banks and mainstream lenders rely heavily on your credit history, we will always consider those with adverse credit, a history of bankruptcy or CCJs.

Your success at paying other loans and credit in the past is used as an indicator of your creditworthiness and how likely you are going to repay future credit. However, a bridging loan is different to a standard personal loan or credit card because you also have a property which is a valuable asset used as collateral. Hence, you are able to leverage the value of this property in order to access the funds you need.

Instead of credit checks, we prefer to look at the potential of your property and your plans for it. If you have found a property that you can afford and has excellent growth potential, we will gladly consider your application for funding.

Self-employed accepted

One of the biggest challenges for those who are self-employed is getting access to sizeable finance and mortgages. Unfortunately, traditional mortgage lenders see those as self-employed as slightly higher risk because their income is not necessarily guaranteed each month. As a result, the majority of banks will not offer mortgages to those who are self-employed.

Fortunately, bridging finance is more than happy to accommodate those who are self-employed. After all, typical bridging customers are individual property developers who are looking to obtain finance for a property development project.

Capitalise on high-growth opportunities

The nature of bridging finance allows you to capitalise on high-return opportunities. For property developers, it is an opportunity to purchase flats or homes and turn them into a profit and strike whilst the market is hot.

For fast-growing businesses, they can use bridging finance as a way to stimulate their growth period. This could involve using their offices or premises as collateral in order to generate capital used for advertising, staff or purchasing inventory.

Bridging finance gives you the flexibility to access funds quickly to make the most of very high growth and then repay your loan when you are in a better position to do so.

No upfront fees or exit fees

For those looking to get their project underway and are monitoring their cash position very closely, they have peace of mind that they can receive their drawdown with no upfront fees.

In addition, should the customer wish to repay their loan earlier than the date agreed, mtf allows them to do so after 3 monthd and there are no exit fees involved. Whilst standard mortgages and several other lenders in the industry charge a fee for early repayment, mtf are pleased to offer such transparency and flexibility. In fact, if you repay early, you may be entitled to a reduction in interest charged since the loan term is shorter than anticipated. You can read more about early mortgage repayments.

Annual Bridging Trends Revealed

Bridging loan volume rose 10.7% to £534.1m in 2017, compared to £482.61m in 2016 as demand for short term finance in the UK grew, according to the latest Bridging Trends data.

The increase in 2017 volume continues a trend seen in 2016, when activity rose 11.5% on 2015 levels of £432.51m.

The bridging loan market withstood volatility from major political and economic events throughout 2017, which included a snap general election, an increase in inflation and continued uncertainty over Brexit negotiations.

The year kicked off to a strong start, with £118.79m of bridging loans completed by Bridging Trends contributors in the first quarter, before soaring to £150.7m in the second quarter — the highest level of loans transacted by contributors in a single quarter since Bridging Trends launched in 2015.

Volume cooled slightly in the second half of the year, dropping to £142.75m in Q3 and to £122.49m in Q4.

Bridging Trends is a quarterly publication that collects data from bridging lender mtf and a number of the UK’s leading specialist finance brokers: Brightstar Financial, Enness, Positive Lending and SPF Short Term Finance (SPF), to offer a general snapshot of the UK bridging finance industry as a whole.

The split between 1st and 2nd charge loans remained consistent throughout 2017, with 2nd charge lending rising in every quarter. Second charges accounted for an average of 17% of total market volume in 2017 — up from 16% in 2016.

While a significant portion of bridging loan activity was unregulated in 2017, at an average of 54% of all transactions, regulated bridging loans increased market share on previous years to an average of 46% in 2017, compared to 44% in 2016 and 36.6% in 2015.

Regulated bridging loan activity outperformed unregulated bridging loans for the first time in the first quarter of 2017.

Average loan-to-value levels dropped to 46.6% in 2017, down from 49% in 2016 -highlighting that responsible lending levels continue.

Average monthly interest rates remained consistent throughout the year at 0.83%, dropping slightly from 0.85% in 2016 and 0.91% in 2015, demonstrating how bridging finance has become even more competitive.

Mortgage delays were again the most popular reason for clients taking out a bridging loan in 2017- at 29% of all lending, although this was a reduction from 2016 when they accounted for 34% of activity.

Demand for bridging loans taken out for refurbishments and auction purchases on the other hand increased in 2017.

Average loan terms remained consistent in 2017 at 12 months- up from 11 months in 2016. Average completion times averaged 43 days in 2017, down from 45 days in 2016.

For more information please visit www.bridgingtrends.com

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.