Funding business expansion in just 12 days

There have been a number of challenges for business in 2018. From economic pressures and ongoing Brexit negotiations to rising interest rates- all of which are set to create further challenges for the SME community in one way or another.

Access to finance, however, continues to be a critical challenge for UK small businesses. There is an ongoing lack of flexibility and for companies trying to react quickly to the new challenges in the market, that makes it hard for them to seize new opportunities.

Small business owners need a wider, more versatile pool of liquidity to draw from that is tailored to meet their needs. One major source of capital available and willing to fund the SME space is bridging finance.

Case in point

As an example, mtf recently completed a bridging loan for clients who were looking to raise funds to invest in their growing retail business.

On the strength of the cash flow from their first retail premises, the clients had been able to obtain a commercial mortgage for a second location. However, an opportunity had suddenly come up to purchase the premises next door. To achieve faster growth, the clients wanted to purchase both premises- expanding their storefront, as well as purchase stock for the new, larger store.

The sellers had a specific completion date which meant the clients needed to move quickly to take advantage of the opportunity and were unable to obtain a commercial mortgage in the time-frame required.

Faced with roughly a fortnight to complete the purchase, the clients needed to act quickly. As time was of the essence, they were immediately introduced to us by one of our long-standing brokers.

On receipt of the enquiry, mtf was able to give an immediate decision, and we issued the offer of loan that day. The clients needed 100% of purchase price, so released equity in their principal residence by way of a second charge to increase funding.

Given that the commercial property and the residential property now needed to be valued, it was imperative that the valuation was undertaken as soon as possible. Therefore, we instructed the valuation at the same time as going to offer. Our team then worked around the clock to ensure all the legal requirements were addressed to ensure everything was ready to be sent to our lawyers as soon the valuation report came in.

In just 12 days, mtf provided a £450,000 bridging loan spread over both assets at 65% LTV, based on the open market value of both assets. Interest was retained at 0.95% per month, over a 12-month term, with no exit fees or ERCs. No personal guarantees were required.

Our loan meant the clients were able to purchase the property by the proposed completion date- capitalising on a fantastic investment for their business. What’s more, the 12-month term gave them plenty of time to pay for the initial operating costs and purchase additional stock. The clients would then work with their broker on the exit by refinancing on the main residence and by taking out a commercial mortgage on the new premises.

The client’s broker later commented:

“This case was difficult initially as the clients had tried to secure their own funding before coming to me. With such a short deadline in which to complete the purchase, I knew I had to place the case with a lender that could perform. mtf was the obvious choice here and whilst the clients had themselves received indicative terms from other lenders at lower rates, I carefully explained that there were aspects of the case that many other lenders would not have understood which would be relevant to this case.

“It was the combination of good advice and robust performance from mtf which made the deal happen with days to spare. The new shop is now open, and we are working through the exit for the clients now.”

mtf’s bridging loan products are designed to meet the many diverse needs of business owners. As a non-status lender, we do not require evidence of trading history, accounts or proof of income, and do not require personal guarantees. This allows us to take a practical, common sense approach to lending.

To find out more, speak a member of our team on 0203 051 2331 or click here to fill out our quick enquiry form.

Looking to add value to your portfolio?

With mainstream lenders implementing tougher restrictions, it has been harder for landlords and investors to obtain a buy-to-let mortgage, faced with more hoops to jump through in a time-consuming process. This can hinder those requiring fast access to funds.

Furthermore, for those looking to buy properties in need of major refurbishment, the difficulty in accessing mortgages from high street banks has intensified, as banks are less likely to lend on uninhabitable properties.

Bridging finance has been able to fill this void, gifting investors the ability to make necessary renovations to enhance the value of their properties, by providing funds with speed and agility.

One of the most obvious advantages of a bridging loan is the speed at which funds can be delivered.london-zoom

Whether you’re looking to generate more rental income or add value to your portfolio, mtf is here to get your bridging loan completed in a matter of days, preventing you from either missing out on an opportunity or leaving a property sitting in your portfolio without generating returns while you wait for financing from a long-term lender.

As an example, we were recently approached by clients looking to raise funds to complete refurbishment works on two properties in their portfolio. They were unable to get a mortgage from a mainstream lender as the properties weren’t lettable in their current condition.

In just 11 days, mtf provided a £162,500 second charge bridging loan over their main residence, at 65% LTV. Interest was retained over a 6-month term, with no exit fees or early repayment charges. No personal guarantees were required.

Our bridging loan gave our clients the funds they needed to carry out the works in order to significantly increase the value of the investment properties. They then refinanced the properties with a long-term buy-to-let mortgage from a bank to exit the bridging loan against a higher value.

mtf is a non-status lender, therefore, we will take a view on CCJs, defaults, and arrears and we do not require evidence of credit history, accounts or proof of income- instead, we focus on the property and your future plans.

For many investors and developers, the difference between success and failure is being able to finance a project, a bridging loan could provide solutions and turn your aspirations into achievement.

Key product features:scaffolding

  • Rates from 0.75%
  • Loans from £100k- £10m
  • Up to 70% LTV
  • Terms from 3-24 months
  • BTL, commercial, HMOs & mixed-use assets
  • Adverse credit, CCJs, and arrears considered
  • No exit fees/ No Early Repayment Charges
  • No personal guarantees required
  • No credit scoring

To find out more, speak a member of our team on 0203 051 2331 or click here to fill out our quick enquiry form.

Scrapping stamp duty would improve conditions, say property investors

68% 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 2018 Property Investor Survey showed.

The government introduced a series of changes to slow down an overheated property market and reduce the number of buy-to-let investors. The introduction of the 3% surcharge in April 2016 has severely limited investor appetite for buying properties with the intention of renting them out.

Meanwhile, 32% 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.

 

Some 66% of the 100 property investors surveyed revealed they now own properties in a limited company, with 82% of those saying this was due to the reduction in mortgage interest tax relief.

In total, 80% of those questioned said they felt the Government was not doing enough to support them.

Property investors have been dealt some setbacks, impacted by changes to stamp duty and changes to tax relief. Despite the changes, many investors remain resilient and mtf is here to support them and fulfill 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.

 

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.

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.

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

 

IN THE SPOTLIGHT: commercial bridging finance

The UK commercial sector has endured some tough times in recent years- with events such as the EU referendum, UK elections, and Donald Trump’s presidency all having their effect on the market. However, in light of slowing growth in the residential market, investors are seeking out opportunities in the commercial market and demand is continuing to increase.

According to the latest data released by HM Revenue & Customs (HMRC), UK commercial property transactions hit a nine-year high, with a total of 127,280 purchases made in 2016/17 –a six per cent rise over figures recorded the previous financial year.

Commercial property is becoming more popular with private investors, many of whom are being driven away from the residential buy-to-let market by the increasing regulation and rising taxes.

Auction house Allsop recently announced it had seen three times the number of buy-to-let converts dipping into commercial property since the cuts to mortgage interest relief for residential buy-to-let properties were announced. Yet, the sector is still greatly under served by mainstream lenders, mainly because of the risks involved due to the volatility of commercial property prices.

Commercial finance is a multifaceted form of finance- there is not a ‘one size fits all’ approach, each loan must be assessed individually and priced according to the risk. The underwriting process is complex and some lenders can be inflexible in their decisions.

london-skyline

Borrowers seeking commercial finance need more innovative options, tailored to meet their needs and one such source that has become a critical tool to fund this community, is bridging finance.

Bridging finance has presented a real-time solution by providing a quick and flexible injection of liquidity to fulfil funding needs. The market is famed for constantly adapting to change and for its product innovation. For example, mtf recently introduced a commercial loan product with a 24-month term, due to demand from our brokers.

A commercial bridging loan can be secured on many property types, including semi-commercial, commercial property, and land. In addition, many income sources ranging from employed, self-employed and sole traders to partnerships and limited companies will be considered. Funds can be used for all existing investments to re-finance and improve cashflow, or to purchase business’s such as hotels, land or retail units.

What’s more, because bridging loans are now much cheaper, they are more appropriate for a wider range of borrowers and a wider range of circumstances.

mtf’s bridging loan products are designed to meet the many diverse needs of commercial property investors. As a non-status lender, we do not require evidence of trading history, accounts or proof of income and do not require personal guarantees. This allows us to take a practical, common sense approach to lending.

As an example, a property development company needed funds to purchase a £4 million commercial asset based in Peterborough, which they intended to convert into offices.

The developers had a specific completion date and were unable to obtain a commercial mortgage in the time-frame required.

As time was of the essence, our broker partner approached mtf and we provided a £1.8m commercial bridging loan, at 45% LTV based on open market value. Interest was retained at 0.95%, over a 12-month term, with no exit fees or early repayment charges.

In just under 3 weeks, the clients were able to purchase the commercial investment asset and the 12-month term gave the client plenty of time to refinance with a commercial mortgage.

At mtf, we remain committed to offering sensible, flexible, non-status bridging finance loans to commercial property investors and SMEs.

Product highlights:mixed-residential

 

  • Rates from 0.95%
  • Up to 65% LTV on open market value
  • Loans from £100,000- £5,000,000
  • Terms from 3-24 months
  • Commercial/ semi-commercial/ HMOs
  • No exit fees
  • No ERCs
  • Whole of England coverage

why use mtf?

mtf is here to work with you to get your commercial bridging 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 your future plans.

  • No personal guarantees required
  • No credit scoring
  • Lend to foreign nationals and offshore companies
  • Underwritten offers issued within the hour
  • Average completions within 9 days

Don’t miss out on an investment opportunity, call mtf on 0203 051 2331 or apply online to see how we could help turn your aspirations into achievements.

IN THE SPOTLIGHT: auction finance

Driven by attractive prices and the speed at which a deal can be completed, property auctions are appealing to a wider audience, including buy-to-let investors, who are increasingly visiting auction rooms in a bid to find a good deal.

Property investors can benefit from buying a property at auction below market prices, typically within a 28-day time frame. They can also benefit from contributing smaller deposits of around 10%.

However, an investor wanting to take advantage of these opportunities can often face barriers when it comes to raising funds. Either they are unable to get a mortgage because the property requires major work, or it is virtually impossible to secure a mortgage in the tight 28-day time frame.

live-auctionThese circumstances have caused auction buyers to rethink their financial arrangements and seek alternative methods of funding, with auction finance offering a real-time solution to the funding gap. mtf has seen a notable increase in applications from investors and developers wanting to buy properties at auction.

One of the main benefits of an auction finance loan is the speed at which funds can be delivered. Where a mainstream bank may take several months to put together a loan for a borrower, an auction finance company is often able to make lending decisions within hours of the initial enquiry, so funds could be released in less than a week.

mtf completed a case for a client who needed £215,000 to complete an auction purchase and make renovations to the property. Their mortgage lender couldn’t provide the financing in the time-frame required and so they faced losing the deposit.

mtf provided a £215,000 loan, at 65% loan-to-value, over a six-month term, with no exit fee or early redemption penalty. We managed to provide the loan within 24 hours, saving the client’s deposit. They then had the time to renovate the property and increase its value before refinancing out of the loan with a buy-to-let mortgage.

Some auction finance providers can work with clients to ensure they go into an auction fully prepared and at a competitive advantage. Our clients look at catalogues to identify target properties, setting themselves a maximum threshold they want to pay. We can review their loan options at an early stage, prior to auction, and provide them with indicative terms. This way they can go and bid with confidence, knowing they have adequate finances in place so that a transaction can complete with minimum fuss.

product highlights

  • Rates from 0.89%
  • Up to 70% LTV on open market value
  • Loans from £100,000- £5,000,000
  • Terms from 3-24 months
  • Commercial/ semi-commercial/ residential assets
  • No exit fees
  • No ERCs
  • Whole of England coverage

why use mtf?

mtf is here to work with you to get your auction finance 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 your future plans.

  • No personal guarantees required
  • No credit scoring
  • Lend to foreign nationals and offshore companies
  • Underwritten offers issued within the hour
  • Average completions within 9 days

Don’t miss out on an investment opportunity, call mtf on 0203 051 2331 or apply online to see how we could help turn your aspirations into achievements.

Specialist lenders step up to help property investors

According to mtf’s latest Property Investor Survey, 75 per cent of property investors were unable to secure mainstream funding in the past 12 months, with nearly half (44 per cent) attributing affordability as the main barrier.

 

obtain-mainstream-funding

 

34 per cent of those surveyed said they were unable to obtain mainstream funding due to adverse credit and 22 per cent blamed stricter lending criteria.

 

what-reason-refused

 

However, 75 per cent of investors revealed they had managed to raise alternative finance.

 

raise-alternative-finance

 

47% of investors got a secured loan as an alternative, while 39% opted for a bridging loan.

 

what-product

 

Three quarters of investors intend to expand their portfolio in 2017, with 67% targeting London and 33% looking to buy in the South East, in an encouraging move despite changes to tax relief for residential landlords.

A majority of respondents said scrapping an additional 3% stamp duty hike on buy-to-let and second homes would greatly help, when asked how the UK government could improve the private rented sector.

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.

It’s certainly been a tough 18 months for landlords but alternative lenders are stepping in to meet the needs of borrowers.

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

BRIDGING TRENDS: Bridging activity down in Q1

Gross bridging lending activity slowed in the first quarter of 2017, according to the latest Bridging Trends data.

Data from Bridging Trends revealed contributor gross lending reached £118.79 million in the first quarter of 2017, constituting a 5.5% decrease on Q4 2016 (£125.66 million).  The figure is also down on the corresponding data for Q1 2016 by 5.23% (£125.35 million).

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

Regulated bridging loans outperformed unregulated bridging loans for the first time since Bridging Trends was launched (April 2015). The number of regulated loans transacted by contributors increased from 37.3% in Q4 2016 to 50.7% in Q1 2017.

Mortgage delays were again the most popular reason for the use of a bridging loan in Q1 2017 at 31% of all lending, dropping from 35% during Q4 2016. Refurbishment was again the second most popular reason for getting a bridging loan contributing to 23% of all lending.

First charge lending for the quarter rose to 86.6%, from 82.6% during Q4 2016. Second charge transactions dropped slightly from 17.4% in the previous quarter, to 13.4%.

Average LTV levels dropped to 46.2% in Q1 2017 whilst the average monthly interest rates were up to 0.83%, representing an increase of 0.05% on the previous quarter.

The average completion time on a bridging loan application increased by 2 days to 50.

The average term of a bridging loan hit a new high at 12 months.

The significant swing towards regulated lending marks an interesting shift which, in turn, we consider has impacted the average time it takes to complete a bridging loan.  Also, whilst the level of regulated activity is up it is interesting to see rates increase for the first time in 5 reporting cycles.

Whilst it is too early in the year to draw any firm conclusions from this first quarter of data, it is these key parameters we are most keenly observing as we move forward in the year.

For more information, please visit www.bridgingtrends.com

bridging-trends-2017-q1