How to ditch the property chain without ditching your next home

Friday, 31st March, 2017
bridging finance

How many times have you – or people you know – been affected by the dreaded breakdown in a property chain?

Unpleasant, right? Particularly if you’re weeks (if not months) down the line and have all but physically moved in to what you hoped would be your next new home.

The good news is that personal bridging loans provide a way in which to beat the housing chain and reduce your exposure to any last minute nasty surprises.

At the current time it’s not a method that is commonly used as a way in which to ‘bridge the gap’ – and not for any particular reason other than most people don’t really know about it. Or, if they do, they tend to feel that it’s out of their reach. Well it isn’t, and here’s why.

What is bridging finance?

Chain breaking bridging finance solutions represents a fantastic route to keeping on track when it comes to buying your next property.

A bridging loan is essentially a short-term finance arrangement that enables people to complete the purchase of their property even if they’ve been let down by their buyer.

As you might expect, the rate of interest is typically higher – but if you’ve already invested time and money in a process that’s got you right to the finish line, you might be reluctant to throw the towel in.

Can I get a bridging loan?

Landlords and amateur property developers, including those who purchase at auction and need quick access to finance after grabbing a bargain, generally use a short-term bridging loan. However, it has become more popular amongst the general public given the tightening of regulation around lending, and the longer waits for lenders to approve a mortgage application following the introduction of more stringent frameworks around mortgage lending.

Is there an age limit for bridging loans?

People are now living longer than ever before, and with that comes the understanding that people over 75 may also need access to bridging finance, too. However, restrictions on lending has also meant that mainstream mortgage products are more difficult for the elderly to secure, which is why bridging is a useful route to finance.

Interestingly, the rules that restrict the lending of traditional mortgages to those of a certain age do not apply for bridging loans, as interest payments are deferred until the loan is redeemed when the sale finally takes place.

Other than that, anybody is able to apply for bridging finance.

Do your research – and use a broker

As with most mortgages and finance products, much depends on the individual applicant. If you’re considering applying for a bridging loan or are wondering if bridging finance is the right option for you, simply give us a call.

If you have decided on using a broker, then one important piece of advice I’d like to offer is to always use one that is Financial Conduct Authority-regulated – like Complete Mortgages – as bridging loans are a niche product and may not be suitable for everyone.

Interested in something other than bridging finance? We also specialise in buy to let mortgages, first time buyer mortgages, sub prime mortgages, equity release mortgages and self build mortgages. Call us on 01483 238280 or email info@complete-mortgages.co.uk to find out more.

Commercial and bridging loans are processed through our subsidiary company, Complete Mortgages Property Limited.

By Mark Finnegan, Director at Complete Mortgages

A complete guide to Houses in Multiple Occupation Mortgages

Wednesday, 30th November, 2016

In the modern age, where information is in abundance, most people are au fait with most things.

From changing a plug to servicing your car, all you need to do these days is ‘Google it’. People now even attempt to self-diagnose their ailments via the Internet or attend a doctor’s appointment armed with a level of knowledge that even a decade ago wouldn’t have been possible.

And although the mortgage market is very different to the market of keeping people alive and well, there are some similarities.

For example, everyone knows what a mortgage is and will meet their mortgage broker with a good understanding of what is available. Similarly, most people know about buy to let mortgages and their benefits. These days, it’s not even uncommon to hear people debating the merits of bridging loans and commercial mortgages in the pub.

However, if you ask anyone what a houses in multiple occupation mortgage (or HMO mortgage) is, you’re likely to be met with a blank face.

And that is exactly what has prompted this article. So, let’s start at the beginning.

What is a HMO mortgage?

A houses in multiple occupation mortgage relates to a mortgage taken out on a property that is used to house multiple people, all of whom are living their own independent lives yet share the same facilities, and who, together, do not constitute a family unit.

That’s a bit clearer. Can you provide examples?

Yes, common examples of HMOs include a house or flat share, student accommodation, a converted house that’s been divided into bedsits or a converted property with mixed accommodation types.

Sounds interesting – but it also sounds like hard work. What are the benefits?

HMOs tend to work for both tenants and landlords for very different reasons. For tenants, renting a room is a much more affordable proposition then renting an entire house or flat. For the landlord, gross yields are generally higher and it means that all their eggs aren’t in one basket (i.e. a landlord doesn’t have to wait to let an entire house and the risk of periods of not letting one room is cushioned, if not eliminated, by the fact that others will be let).

Okay, what do I need to think about before applying?

HMO mortgages are more complex than the standard buy-to-let mortgage, however there is a wide selection of HMO mortgage products available. Given the level of complexity, we would recommend applying for a HMO mortgage via a trusted mortgage broker, who will be able to save you time, hassle and possibly a degree of heartache.

The areas of discussion that your mortgage broker will cover prior to the application are likely to include:

The number of rooms being let The property’s location Previous landlord experience
Projected yield The nature of the tenants (students, professionals etc.) Credit rating
Level of borrowing required How you intend to purchase the property Whether or not your HMO arrangement will require a licence

Anything else I need to know?

Yes. If you are planning to apply for a HMO mortgage, then you need to bear in mind that large HMOs require a licence to ensure that the property is compliant with occupant safety requirements and meets the Housing Health and Safety Rating System. You can find more information on how to apply for a HMO licence here.

Whether you’re interested in arranging a HMO mortgage, looking to explore your buy to let mortgage options or simply want to remortgage, Complete Mortgages can help. Contact the Complete Mortgages team on 01483 238280 or email info@complete-mortgages.co.uk to find out more.

By Mark Finnegan, Director at Complete Mortgages

Bridge over less troubled water

Tuesday, 15th March, 2016
Short term finance

Bridging loans have reached an all-time high, accounting for £4bn (or 2 per cent) of the total mortgage lending market. A huge achievement given how prior to the financial crisis the sector was worth less than £1bn.

The meteoric rise of the bridging loan began when, during the troubled times that followed the crisis, lenders stopped lending and the economy stopped growing, forcing those in need of finance to ‘bridge the gap’ on any finance-related agreement they either had or were in the process of arranging.

Nine years later, however, and during a period when economic growth is steady and mortgage deals are amongst the most competitive we’ve seen in years, we’re still witnessing a 300 per cent increase in the value of bridging loans being granted. So, what’s behind this ascent and can we expect to see this upward trend continue?

In short, the answer is ‘yes’ and it is mainly attributable to the exponential rise in property prices and lenders’ increasing willingness to lend on projects that, not too long ago, they wouldn’t have even considered. Let’s not forget that the average property price in 1975 was £10,388 compared with £195,279 in 2015* – a huge gap and one that traditional mortgages alone have, arguably, struggled to fill.

The flexibility of a bridging loan, the fact that it’s granted on the basis of the borrower’s security in addition to its clearly defined loan term, also has wide appeal (for both borrowers and lenders), too. Its short-term nature, where a borrower agrees to pay back the entirety of the loan plus a pre-agreed amount of interest by an arranged date is, for many, a stronger proposition than a conventional loan, where on-going repayments are made on loans often spanning decades. A bridging loan can also be granted within seven to 10 days. And it’s these factors that are seeing bridging loans increasingly being used for a variety of purposes and not just property purchases.

As a Guildford mortgage broker that specialises in bridging loans, having recently secured the coveted consumer credit licence, we’re seeing the perception of a bridging loan shift from last-minute property measure to a serious alternative to mainstream lending. In fact, our clients have used bridging loans for buying property at auctions through to financing business operations and even paying that untimely (and surprise) tax bill.

However it is not always straightforward and as an experienced mortgage broker, it is Complete Mortgages’ job to help you establish a) if bridging finance is available to you and b) if a bridging loan is the right solution for you. After all, and in the interests of transparency, short term and quick access finance often comes at a price and if there’s a better, more suitable option for a borrower, then it’s our responsibility to find and present it to the client.

In summary, bridging loans are now a much more common route to finance however the pros and cons need to be explored before you sign an agreement. For those considering arranging a bridging loan or if you simply want to explore your short-term finance options, then get in touch with someone at Complete Mortgages on 01483 238280 or email info@complete-mortgages.co.uk.

And remember that we don’t just specialise in bridging loans, but also buy-to-let mortgages, commercial mortgages and insurance, too. Call us to find out how we can help you in 2016.

Your property may be repossessed if you do not keep up repayments on your mortgage.

*Source: www.economicshelp.org

By Mark Finnegan of bridging loan specialist Complete Mortgages

Bridging loan industry grows 14% in third quarter

Tuesday, 30th October, 2012

The bridging loan market rose 14 per cent, from £348m in the second quarter to £399m in the third quarter, according to West One Loans’s latest Quarterly Bridging Index.

The bridging market is now predicted to hit £1.5bn by the end of 2012, in the wake of larger loans and higher volumes, says the lender.

West One Loans chairman Duncan Kreeger says: “Pain for the big high street lenders has been gain for bridging lenders. The recovery in the main mortgage market has been nipped firmly in the bud by renewed uncertainty. Funding from the money markets has become 45% more expensive since February – and higher capital adequacy requirements mean more business will be coming the way of the bridging market. Mainstream lenders are also being squeezed by the lack of confidence the money markets still have in even some of the largest banks.

“The big banks are turning away borrowers who, in a normal market, would be credit worthy. Credit scoring is tight, and plenty of affordable mortgages are advertised as widely available, when in fact borrowers have to cross a high threshold to be able to access them.”

The average loan size rose from £368,000 in the second quarter to £398,000 in the third. Average loan amounts still remain well below March peak level of £479,000.

Average rates dropped from 1.43% in the second quarter to 1.31% in the third quarter. Over the same period of time, LTVs fell from 48% to 46%.

Complete Mortgages has an in-house bridging and commercial specialist (predominantly covering the Surrey and London area but deals have been done all over the UK) therefore we are fully equipped to deal with any enquiries of this nature. Please contact us on 01483 233014 for a consultation.