Investors use bridging to finance bargain basement buys

Brokers have seen a 200% increase in demand for bridging finance in the last nine months as investors have been seeking bargains at auctions and through other distressed sales.

A number of smaller bridging firms have had to withdraw because of a lack of funding over the past year. However, unlike the mainstream market, the main bridging lenders have been able to offer a consistent supply of products without having to alter LTVs or rates dramatically.

Gary Booth, CEO at Tiuta, said: “Brokers that have adapted to the changing environment have been very successful in 2008. We are regularly seeing brokers place several cases a week as their more experienced buyers snap up bargains. With falling interest rates we expect this to continue as the primary residential market is still relatively static, but the demand for rental is increasing, which is creating a thriving market for brokers and their clients that can move quickly when opportunities occur.”

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Elephant’s broker quits

SVS Securities plc has resigned as the Elephant Loans & Mortgages Plc’s broker with immediate effect.

On 1 September, Elephant Loans & Mortgages plc announced to the Stock Exchange that negotiations to undertake the previously announced proposed reverse takeover have now been terminated.

In March, the embattled master broker said it would be joining broker network FT Partners to reduce the cost of regulatory compliance.

Following the termination of the proposed reverse takeover, Elephant said it was in separate negotiations regarding a refinancing package and expected to report back to shareholders shortly.

The company’s shares remain suspended.

Orbiter unveils mortgage and secured loan comparison service

Orbiter, the new online sourcing and compliance service from Orbiter Group, is to enable advisers to compare mortgages and secured loans.

Pete Thomson, sales and marketing director at Orbiter Group, said: “Advisers are used to being able to source mortgages and secured loans, but to be able to compare them to each other is something we are sure is going to prove hugely popular with advisers in the current market. This is yet another example of a benefit Orbiter can offer the market as a result of being built using the most up to date technology available.”

Wayne Lee, from north-west based broker Alpha Money, said: “Mortgages have been incredibly difficult to obtain for many clients after the turmoil in the mortgage market, and this had led to secured loans becoming an increasingly popular option. An online facility that enables mortgages and secured loans to be directly compared is a really useful feature of the Orbiter system and something that can be used very effectively in face to face discussions with clients.”

This is the latest in a series of announcements from Orbiter including its ability to offer tranche management facilities to lenders and compliance monitoring to networks. Orbiter has also announced it will include the option for advisers to include non-intermediary products when sourcing deals for clients.

FSA issues warning on Leicestershire adviser

The FSA has issued an alert to consumers not to take mortgage or financial advice from Swati Patel from Leicestershire firm Mortgage Deals 4 U Ltd. Ms Patel is currently under investigation by the Leicestershire police.

In a statement, the FSA says: “We strongly advise customers not to take mortgage or financial advice from Swati Patel or to give her your personal and financial details.”

Customers who took out a mortgage, remortgage, or a personal loan through Swati Patel, or are in the process of doing so, are strongly advised to contact Simon Boden at Leicestershire Police on 0116 222 2222 ext 5194.

They may also contact either Chris Walmsley or Arzoo Azizi at the Financial Services Authority on 0207 066 5894 or 020 7066 3512, or via email to chris.walmsley@fsa.gov.uk or arzoo.azizi@fsa.gov.uk

Worried clients can also call the FSA’s Consumer Helpline on 0845 606 1234 (call rates may vary).

Mayfair offers below market value bridging product

Mayfair Bridging has launched a new product called BMV Bridge.

It is designed for below market value (BMV) purchases and offers 100% of the purchase price within 65% LTV for investment residential property and 60% LTV for commercial property.

Director Shoaib Bux said: “BMV Bridge takes advantage of the discount received on a property purchase and offers the investor 100% of the purchase price. The majority of lenders now specify a minimum ownership period of six months before they allow a remortgage to take place. This product overcomes this by offering 100% of the purchase price with six months’ interest being retained. At the end of the term the borrower will have the option to remortgage the property with the majority of lenders on the open market.

“The minimum ownership rule of six months has made it very difficult to redeem a bridging loan prior to this period, with a handful of lenders being an exception. Mayfair do not have any early repayment charges so if the loan was redeemed early then the borrower would not be penalised and any unallocated interest would be credited.

“The current credit climate has made it hard to obtain viable exit routes but this product takes the pressure off from the borrower giving him a wider choice of lenders at the end of the term. There is very strong demand for BMV Bridge and Mayfair still have a very strong appetite to lend. We are committed to the broker market and are proud of the strong relationships already formed with our packaging partners.”

Portfield adds unsecured lender to panel

Portfield Loans & Mortgages has added unsecured lender FLM to its panel.

FLM offer unsecured loans up to £3,000 to clients struggling to get credit, providing a guarantor for the loan is available.

Mark Stringer, managing director at Portfield said: “As lenders continue to withdraw from the secured loan market and restrict their criteria, we have seen a significant increase in our unsecured product range.

“Adding FLM to our lender panel will allow us to provide even more financial solutions to intermediaries and their clients.”

Guardian Homeloans ups broker commissions

Secured loan broker Guardian Homeloans has launched a 55% commission share initiative for UK intermediaries, brokers and introducers.

Ian Hesketh, managing director of Guardian, said: “The market needs a kick start and those currently operating in the mortgage and financial services sector will be finding it particularly difficult to make ends meet with reduced lenders, customers and of course income.”

He added: “I felt it was time to inject more money into our distribution chain by increasing commission to introducers. This is marked by a commission share on the basis of a 55%/45% split of all day one fees and commission received (55% being paid to the introducer). A one off admin charge of £395 is deducted prior to the split to cover costs such as survey, references, consents, searches etc that can sometimes top the £500 mark per application. Unlike mortgages, with secured loans we are responsible for these costs even if the client does not proceed.”

“The bottom line is that introducers/brokers will earn more money with Guardian. This will mean that one completed prime status loan of £25,000 could earn the introducer/broker in excess of £1,400.”