Property Investors call for support from UK Government

The results from our latest Property Investor Survey has revealed 97% of property investors do not think the Government is doing enough to support the UK property market.

When asked what changes the government could introduce to better support the UK property market, 50% of the 135 property investors surveyed said scrapping the 3% stamp duty surcharge would improve conditions in UK real estate.Meanwhile, 33% of property investors called for a reversal on the changes to tax relief on buy-to-let mortgages. Whilst 17% believed introducing a tiered tax system on buy-to-let property would better support the UK property market.

When asked who they would vote for if a general election was called today, half revealed they would back the Conservative Party. 18% said the Liberal Democrats, followed by the Brexit Party at 16%.

Only 3% of property investors revealed they would back the Labour Party in a general election.

It is interesting that the Stamp Duty surcharge and removing it is more important to property investors than mortgage interest tax relief – it suggests this group of investors are the ones who are most likely to expand their portfolios.

The government has introduced a series of changes to slow down an overheated property market and reduce the number of buy-to-let investors over the years. Property investors have been dealt some serious setbacks, impacted by changes to stamp duty and changes to tax relief but despite the changes, many remain resilient and still see property investment as a key tool for retirement planning, and a good home for their monies whilst interest rates are low.

For more information on how a bridging loan could help you purchase a buy-to-let property, call us on 0203 051 2331 or fill in our contact form and a member of the team will contact you shortly to discuss your requirements.

Unlocking your value

Since the economic downturn, many property investors and business owners have found themselves “asset rich but cash poor,” with the bulk of their wealth tied up assets than in cash savings. And though the UK housing market has enjoyed a continued strong performance, mainstream lenders have since implemented tougher affordability restrictions, meaning property investors and business owners have struggled to release the equity in their assets, faced with more hoops to jump through in a time-consuming process.

Bridging finance can present a real solution to those who are asset rich but lacking in the cash needed, providing a quick injection of funding to finance acquisitions and expansions.

One of the main features of bridging finance is the speed with which borrowers can be provided funds. What’s more, some bridging finance lenders offer loans on a non-status basis, meaning they don’t require evidence of trading history, accounts or proof of income. The financing is based on the property the loan is secured on, an ideal solution for those looking to instantly unlock the capital from their assets.

MT Finance doesn’t require evidence of trading history, accounts or proof of income. Instead, we focus on the property and a client’s future plans. This allows us to take a practical, common sense approach to lending to assist those looking to unlock the capital from their assets.

For more information on how a bridging loan could help you purchase a buy-to-let property, call us on 0203 051 2331 or fill in our contact form and a member of the team will contact you shortly to discuss your requirements.

Bridging the gap

Borrowers who need fast access to funds regularly see their property purchases scuppered by mainstream lenders taking too long to process applications.

With mainstream lenders having to implement stricter affordability testing on residential and buy-to-let (BTL) purchases, it has been harder for borrowers to obtain mortgages, as more stringent underwriting has made the application a more time-consuming process.

This can severely hinder those requiring fast access to funds as many property purchases rely on the ability to secure finance by a set completion date; when mortgage delays hold up the deal, you could end up missing out on an opportunity.

Bridging finance has been able to fill the growing gap between the borrower’s need to access funds swiftly, and mainstream lender’s ability to provide them, gifting borrowers the ability to buy quickly when opportunities arise.

Speed is critically important in bridging finance. It is what makes bridging finance a fundamental tool for those who need to raise funds within a short time-frame. From clinching a fantastic deal to buying at auction within a 28-day timeframe, the need for quick access to finance is clear and bridging loans have always been there for those property investors to fill a liquidity gap.

Whereas a mainstream bank can take several months to agree a loan in a process that can be stressful as well as time-consuming, a bridging finance lender is often able to make lending decisions within hours of initial enquiry and release funds in less than a week, preventing borrowers from missing out on time-sensitive opportunities that come their way.

For example, we recently helped a client who required funds to complete the purchase of a commercial property, which he planned to convert into a house of multiple occupation (HMO). The vendor had set a specific timescale for completion, therefore the client needed to act quickly in order to capitalise on this valuable opportunity.

MT Finance provided a first charge loan of £960,000 at 59% LTV, seven days before the client’s deadline. Interest was retained at 0.79% per month, over a 12-month term. Our bridging loan meant the client was able to purchase the property before the set deadline.

With highly professional specialist lenders offering flexible products at competitive rates, bridging finance has become an attractive proposition to those who need certainty when conducting their property purchases and who may need to move swiftly in order to capitalise on an opportunity.

So, whether you have been let down by your mortgage lender at the last minute and need to exchange/complete on your purchase, or your lender is taking too long to agree your mortgage and you need to exchange to secure the property, a bridging loan could provide a solution.

The property world moves fast, particularly when it comes to investment properties, and fast funding is increasingly crucial when pitted against an ever-slowing mortgage environment. For more information on how a bridging loan could help you purchase a buy-to-let property, call us on 0203 051 2331 or fill in our contact form and a member of the team will contact you shortly to discuss your requirements.

 

Professional landlords call for manual underwriting process

Over a third of property investors want buy-to-let lenders to apply a manual underwriting process for professional landlords, as they struggle to obtain buy-to-let mortgages off the high street.

The results from MT Finance’s latest property Investor Survey showed that 42% of property investors said they had struggled to secure a mainstream buy-to-let mortgage in the last 12 months, with 54% citing affordability criteria as the primary barrier to mainstream funding.

This was followed by age restrictions at 32% and insufficient deposit capital at 14%.

 

Yet, 46% of those unable to obtain a BTL mortgage filled the funding gap with other sources of liquidity, as 50% of those opted for bridging loans, 34% refinanced through a specialist BTL lender, and 16% opted for a secured loan.

 

As a result, 58% of the 125 property investors surveyed do not think buy-to-let lenders are doing enough to support them.

 

When asked what mainstream buy-to-let lenders could do to better support them, 36% said applying a manual underwriting process for professional landlords would better support them, followed by increasing LTV thresholds at 32% and relaxing age restrictions at 26%.

 

The results from our Q1 2019 Property Investor Survey reflects the impact of stricter affordability and stress testing from high-street lenders on professional property investors’ ability to obtain mainstream funding.

The need for reliable, transparent, and quick access to funds is ever-critical and specialist finance- such as bridging loans, will continue to pick up when a more personalised approach to underwriting is required.

With highly professional specialist lenders offering flexible products at competitive rates, bridging finance has become an attractive proposition to those property investors who are looking to expand their portfolio and need certainty when conducting their business and who often need to move swiftly to capitalise on an opportunity.

For more information on how a bridging loan could help you purchase an investment property, call us on 0203 051 2331 or fill in our contact form and a member of the team will be in touch to discuss your enquiry.

Benefits of a second charge bridging loan

An increasing number of people in need of extra funds are turning to second charge bridging loans to purchase investment properties, inject capital into businesses, or make refurbishments in order to prevent disturbing their existing attractive mortgages.

Demand for second charge lending is set to increase throughout the year. In a sustained low-interest rate environment, it now often makes more sense for a borrower to release equity on a property by taking out a second charge, rather than the prospect of refinancing away from their current deal.

A second charge bridging loan could be the ideal solution for those who already have a mortgage secured against their property but requires further funds for a short period of time.

Second charge bridging loans can be used for many reasons, such as purchasing an investment property, business expansion, and redevelopment of an existing property to name but a few.

What is a second charge bridging loan?

A second charge bridging loan sits behind an existing loan or mortgage. If there is enough equity left in the property to secure another loan against it, a second legal charge may be taken out.

A second legal charge 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.

As it sits behind a first charge loan, a second charge will always require consent from the first charge lender and is usually more expensive than a first charge, reflecting the additional risk taken by a finance provider.

When are second charge bridging loans beneficial?

  1. If you are on a low rate/interest-only mortgage

Using a second charge bridging loan means you keep your existing mortgage rate. There would be no changes to the existing mortgage terms and conditions. A second charge could allow for more flexible repayment terms, which could potentially save thousands of pounds in interest.

  2. If you’re locked into a fixed rate with early repayment charges

If you must pay a large penalty for stopping/switching your existing fixed rate mortgage early, a second charge loan may be cheaper as the existing mortgage stays in place and the penalty is not charged.  It would be beneficial to run a cost comparison in this scenario.

   3. You’re unable to secure further funds from your mainstream lender

Mortgage rules have become stricter in the past couple of years, with lenders applying tough ‘stress’ tests to make sure borrowers can meet repayments if interest rates rise.  However, second charge bridging loan providers don’t rely on the same tests and can tailor a solution to suit your individual borrowing needs. Second charge bridging loans are also particularly helpful for those with unusual income structures, such as the self-employed, or those with complex financial backgrounds.

4. You need the funds quickly

Where a mainstream bank may take several months to put together a loan for a borrower, a bridging finance company is often able to make lending decisions within hours of initial enquiry, so funds can be released quickly, sometimes even in less than a week. A second charge bridging loan can be a useful tool for those who simply need a rapid cash injection.

How much can you borrow?

You can borrow a maximum of 70% loan-to-value and loans can be arranged from £100k to £5m. The actual amount will depend on the available equity in the property and affordability of the loan.

How can MT Finance help?

At MT Finance, 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, we helped a client who required £349,000 second charge loan on her £8.5m property. The client was part way through refurbishing her investment property, but the process had been delayed. She didn’t want to remortgage as she intended to sell the investment property as soon as the refurbishment works on it were complete and didn’t want to be penalised for early repayment.

In just 12 days, MT Finance provided a £349,000 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 second charge bridging loan gave her time to carry out the works and significantly increase the value of her investment property. The client will sell the investment asset to exit the bridging loan, against the higher value.

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.

MT Finance is a multi-award-winning bridging finance lender and we have many years’ experience and know-how when it comes to second legal charges. We assess every single application for a second charge loan on a case by case basis, assessing each case on its own merits. Our flexible approach means we can structure your second charge bridging loan to your exact requirements and allows us to make quick decisions and deliver funds at speed. We also do not charge any exit fees or early repayment fees and do not have any lengthy and tedious application forms for you to fill out.

Our entire application process is quick and easy and with highly competitive interest rates and no upfront fees, we offer a fast, transparent, and stress-free service.

Contact us today by calling 0203 051 2331 or filling in our contact form. Our team are on hand to discuss your second charge bridging loan enquiry and will be happy to answer all your questions and allay any concerns. Please note that if the second charge loan is secured on a residential property, it must be for business use only.

UK Property Investors Remain Positive Despite Uncertainty

A majority of UK property professionals are set to expand their portfolios in 2019, remaining resilient despite a backdrop of uncertainty and squeeze on affordability.

We polled property professionals as part of our research into the future performance of the UK property sector. 80% of investors said they plan to increase their portfolios in 2019, while 20% said they are not making any changes to their portfolio in 2019. Nobody questioned planned to reduce their exposure to the UK property market this year.

 

Of the 80% looking to expand their portfolios, 39% are looking to buy in the South East of England. 25% said Wales, followed by 13% who said the Midlands. Whilst 16% revealed that would not be buying property in the UK.

No respondents said they were looking to buy in London, as investors look to broaden their portfolios outside of the more expensive Capital.

The latest forward-looking results are encouraging especially as 51% of respondents revealed they are uncertain of the conditions for property investors in 2019. 28% believe conditions will not improve in the coming year.

2018 was another challenging year for property investors in the UK, as Brexit negations continued and finances were squeezed by tax changes. When asked what the biggest challenge for property investors had been last year, the majority (40%) of respondents cited affordability. Ongoing Brexit uncertainty was the second biggest challenge at 32%, followed by accessing funding at 17%. Some 11% said Government legislation was the biggest challenge in 2018.

During 2018, 48 of the 101 respondents revealed they had purchased residential properties as investments and 43 respondents had bought commercial properties. 21 said they bought foreign properties as investments. Whilst the majority (50 respondents) said they didn’t purchase any property in 2018.

 

The UK property market has seen a reduction in high-value purchase transactions. This is reflected in the latest data from HMRC, who revealed stamp duty receipts fell by £1 billion last year.

The results from our Q4 Property Investor Survey highlight how higher stamp duty and a lack of affordability has pushed property investors out of London, where more rental properties are vital. While there is continuing uncertainty, particularly over how the Brexit negotiations will unfold, UK property investors remain resilient. The fact that property professionals have revealed they will continue to invest in the UK, despite the uncertainty and numerous challenges, bodes well for the future of the market.

To find out more, speak a member of our team on 0203 475 0176 or click here to fill out our quick enquiry form.

2018 Bridging Trends revealed

Despite the turbulence in the financial markets, bridging finance displayed positive development in 2018 and maintained favourable liquidity, particularly in the second half of the year, according to the latest Bridging Trends data.

Bridging loan volume transacted by contributors hit £766.9 million in 2018, an increase of £232.8 million on the previous year. This is the highest annual gross lending figure to date and comes as four new contributors joined Bridging Trends in 2018: Clever Lending, Complete FS, Pure Commercial Finance, and Y3S.

The split between 1st and 2nd legal charge bridging loans remained consistent throughout 2018, with first charge loans accounting for 83% of the market in all four quarters. Second charges accounted for an average of 17% of total market volume in 2018 – the same average volume as in 2017. In 2016, 18% of bridging loans transacted by contributors were second charges.

A significant portion of bridging loan activity was unregulated in 2018, at an average of 64% of all transactions. Whilst regulated bridging loans decreased market share on previous years to an average of 36% in 2018, compared to 46% in 2017, 44% in 2016, and 37% in 2015.

Average loan-to-value levels increased in 2018 to an average of 55%, from 47% in 2017, and 49% in 2016. This could be attributed to higher LTVs being made available by new entrants in the space.

Average monthly interest rates continue to fall year on year, demonstrating how bridging finance has become cheaper. The average monthly interest rate in 2018 was 0.81%, lower than in 2017 (0.83%) and 2016 (0.85%).

Funding property refurbishments was the most popular reason for obtaining bridging finance in 2018, with the average proportion of loans advanced for property refurbishments increasing from 23% in 2017, to 28% in 2018.

Demand for bridging loans taken out for business purposes also increased in 2018, increasing on average from 12% in 2017, to 14% in 2018.

2018 was evidently a year where borrowers decided to opt for fast and flexible bridging loans to make improvements to properties and bolster yields, against the backdrop of Brexit uncertainty and legislation that has made it tougher to purchase new properties. Consequently, bridging loans for mortgage delays fell in every quarter in 2018.

The average loan term in 2018 was 11 months. down from 12 months in 2017. The average completion time of a bridging finance application averaged 45 days in 2018, up from 43 days in 2017. Average loan completion times were also 45 days for the year in 2016.

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

bridging-trends-2018

Brokers confident for 2019

A majority of brokers are confident about the year ahead, according to our latest Broker Sentiment Survey with 42% of brokers predicting an improvement in market conditions in 2019.

Some 37% of the 113 brokers questioned believe overall market conditions will remain the same in 2019, whilst only 21% of brokers surveyed said market conditions would get worse this year. Almost three quarters (71%) of brokers surveyed said the impact of Brexit would be the main challenge for UK financial services firms in 2019, while 17% cited economic uncertainty, and 4% said lending restrictions would be the biggest challenge.

Despite these challenges, demand for specialist finance is expected to remain strong, with 82% of brokers preparing for a further rise in bridging finance volume in 2019.

In addition, 75% of those questioned reported an actual rise in bridging loan volume in 2018.

For the fourth consecutive quarter, funding a development project was the main reason borrowers took out bridging loans in the last quarter of 2018 at 33%, followed by property purchases at 29%. Whilst 13% of brokers said refurbishment was the most popular purpose for bridging finance in Q4 2018.

For the sixth consecutive quarter, the South East saw the biggest demand for bridging finance in the UK during the fourth quarter of 2018, at 54% — a 7% increase on Q3 2018.

The second highest area of demand was in the Midlands. Only 12% of brokers noted demand for bridging finance in London, down from 41% in the previous quarter.

To find out more, speak a member of our team on 0203 475 0176 or click here to fill out our quick enquiry form.

Property investors still optimistic despite Brexit negotiations

The ongoing Brexit negotiations have left the UK property market in a state of insecurity. This is reflected in the results from our latest Property Investor Survey, where almost half (43%) of respondents stated that the biggest challenge they currently face is the continued uncertainty surrounding Brexit. This is currently seen as a bigger challenge than lending restrictions at 28% and the recent changes to buy-to-let (BTL) legislation at 16%.

The standoff in the Brexit negotiations alongside the Bank of England Governor Mark Carney’s warning that property prices might drop by up to a third after a ‘no deal’ Brexit, has meant that property investors are being faced with the question of how Brexit might affect them.

With a reduction of tax relief shrinking buy-to-let profits, coupled with the introduction of a 3% stamp duty on second homes, property investors are now faced with higher costs which in effect has prompted the need to generate more income. However, due to the Brexit uncertainty many property investors and landlords are unsure if property prices will plateau or plummet and are therefore seeking alternative methods to maximise profits- by adding value to their properties through refurbishments, rather than purchase property as a straightforward portfolio investment. At mtf, we have certainly seen an increase in demand for funds to conduct bathroom and kitchen conversions, loft conversions and to convert properties into an HMO.

Gareth Lewis, mtf’s commercial director echoes the need for property investors to add value to their portfolios. ‘The uncertainty with Brexit means that property investors are not waiting for the government before they seek other options for their portfolios’ he said.

‘They are resilient and savvy, so they will be watching the negotiations closely whilst bolstering their investments and taking opportunities, to allow them to withstand such an economic change’ he adds.

Gareth remains optimistic about the market and believes it is still liquid despite the Brexit uncertainty. ‘There are still lots of opportunities for property investors such as the demand for HMOs due to the rising population in the UK. Investors have therefore changed tact and rather than buying lots of properties that are ready to be let, are doing heavy refurbishments to attract renters or add values to their portfolios’ he said. ‘As we all know, there is still demand houses so as long as that demand remains, property investors will be willing to service the market’ he added.

‘The results from the survey shows that 80% of those affected by the new HMO rules are not willing to sell their portfolio. This reinforces my point that these landlords are looking to hold onto their portfolios and the property market is not experiencing a mass exodus despite regulatory changes or Brexit’ Lewis said.

According to Gareth, the uses of bridging finance has also changed to go with the trend. ‘A lot of the new cases that have come through to us recently are mainly for either refurbishment or using bridging to inject cash to the investor’s businesses. This shows the flexibility of bridging finance as a tool for property investors to service their needs whilst offering competitive rates and access to funds quickly’’ he said.
Bridging finance remains a good source of funding for investors with interest rates starting from 0.75%. ‘At mtf especially, our loans are flexible, offering the landlords peace of mind. We also do not have any early exit fees, so they are free to repay the loan whenever they want’ he added.

Gareth has also seen investors choosing to get funds released in stages to first bolster their property’s value through the refurbishment phase, and later withdraw further funds for further property transactions whilst they wait for the sale of the existing project.

‘The Brexit negotiation process will remain in the thoughts of investors and businesses alike. However, bridging finance enables landlords and investors alike to have access to funding in times such as these, allowing them to continue to thrive and take opportunities as they arise’ he added.

To find out more, speak a member of our team on 0203 475 0176 or click here to fill out our quick enquiry form.

james-anderson

How we make bridging finance effortless for our clients

For a client using bridging finance, certainty and fast access to funds are always at the forefront of their expectations. This is because, by its very nature, bridging finance should be fast and flexible compared to traditional funding methods, such as mortgages.

At mtf, we have not lost sight of this at a time when other lenders are moving on to computer banking models and lengthy application processes.

It is important to us that our brokers, introducers, and clients know they are dealing with people and not a corporation. Therefore, we go to great lengths to ensure that we deliver an open, communicative, and transparent service, and take the time to listen and fully consider each application. From start to finish there is direct dialogue with a decision maker who has the ability to make executive, pragmatic decisions and to drive a case home to completion.

We have built our underwriting process around a simple idea; the value of a property and the rationale of a loan are the most relevant criteria when assessing any bridging finance application.

As speed is such a vital element of bridging finance it’s important that all parties involved move swiftly because if they cannot complete to the borrower’s schedule, the client could miss out on an opportunity. Therefore, mtf has its own legal underwriting team who is responsible for driving the legal process. We feel by having a dedicated team, working in tandem with external lawyers, mtf significantly reduces any chance of delay or misunderstanding.

mtf is committed to building strong relationships. We have never over promised or under delivered because we don’t want to let our brokers or clients down. We always make sure we are continuously working hard to meet requirements.

In a recent example, a client wanted to purchase an investment property and required funds within a fortnight. The client was in Jamaica at the time and due to other commitments, was unable to come back to the UK in time to verify their identification documents. Time was fast running out for the client as he was about to lose an investment purchase.

So, we decided that I would fly out to Jamaica to meet the client, verify his ID, and witness the signing of the legal documents. I immediately flew back with all the signed documents allowing us to proceed with the loan. The client was then able to purchase the investment property with the funds from mtf with days to spare.

It’s important to note that this was for a £150,000 loan, not that of a million pounds plus, demonstrating how mtf will go the extra mile for the client, regardless of the loan amount requested.

Most lenders promise a great and fast service. At mtf, we understand that a promise is only good when it is delivered. We have built the company’s reputation around a strong service proposition, by being open and communicative and running an efficient operation. We are grateful to have received multiple industry awards in recognition of our approach to lending and the exceptional service we consistently deliver.

Enquire for bridging finance today.