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.”

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.”

Cheval makes redundancies

Bridging loan lender, Cheval has made a number of redundancies as it completes an internal restructure.

The lender has placed around eight staff into redundancy, leaving around 20 still working at the firm.

Alan Margolis, chief operating officer at Cheval, says: “It is just a revamping and tightening of the structure of the firm, the redundancies have been made from across the board.”

He adds: “The new operational changes are designed to enhance the speed at which we respond to enquiries and so improve service levels even further.”

He adds: “This week saw the launch of a pilot of a revolutionary approach to the processing and underwriting of bridging loans whereby brokers whose proposals are accepted will receive an Agreement in Principle within an hour of submission and where binding offer letters will be issued after receipt of the application papers and valuation.

“Customers who receive a Cheval offer letter, will do so in the knowledge that their case has been fully underwritten meaning that there will be few if any issues to be resolved before drawing down the funds.

“The piloted approach will go live later this month together with an exciting new product launch and revised rates that will surprise many.”

Creative Mortgage Solutions added to Mayfair Bridging channel

Mayfair Bridging has added Chester-based Creative Mortgage Solutions to its packaged channel.

Director Yasin Patel said: “We are focused on the intermediary market and we pride ourselves with partnering with leading packagers. Brokers will benefit from Creative’s first class packaging services and extensive knowledge on bridging finance.

“Mayfair Bridging has achieved record levels of enquiries from brokers and our packager partners. Feedback has been very positive and introducers are amazed by our quick turnaround times for doing deals.”

Fellow director Shoaib Bux added: “More and more brokers are now switching onto bridging finance and seeing the benefits. The credit crunch has made it a very difficult time for brokers but they are now finding that bridging is an excellent and quick way to supplement their income stream. We are coming away from the days where bridging was perceived as lending of last resort. Education of the product is changing this misconception.”

Kerry Saunders, managing director of Creative Mortgage Services, said: “We are extremely pleased to have secured this important appointment, which further enhances what we can offer brokers.”

For the month of July, Mayfair Bridging is offering an experience in a Lamborghini Gallardo Spyder. Brokers simply have to submit an enquiry to be entered into the prize draw.

Credit extension boosts Bridgingloans.com

Bridgingloans.com has secured an extension to its lines of credit from some UK banks and financial institutions.

The bridging loan provider says that these additional funds will help it deal with the 50% increase in enquiries it has received for its short-term finance during Q2. All credit line extensions are from existing relationships with UK banks.

Ryneveld van der Horst, finance director, Bridgingloans.com, said: “Backing from other lenders is extremely important in tight credit conditions and to maintain business growth. It also builds partnerships with the people you rely on most. When many banks and building societies are closing the doors on further lending to both companies and individuals, it is a true testament to our rigorous processes that they have chosen to extend our credit lines.

“We have been working with the banks in question for many years and are delighted that they recognise the long-term potential of this sector.

“I’ve been delighted that our relationship with funding banks has remained comfortable, and the reason for this is the openness of our bridging process – from individual business plans to balance sheets. In the current financial climate it is vital for the industry as a whole to implement transparent processes – from funding banks to lenders and brokers.”

Tiuta offers 100% loans for undervalued properties

Bridging loan provider Tiuta has unveilead a new product called Underbridge. The product will finance 100% loans on properties that have been undervalued by as much as 40% compared to their open market value.

Typically designed for properties bought at auctions, repossessed properties or distressed sales from property clubs or second homeowners, the 100% offer is based on an independently surveyed valuation of the property’s market value and is available for loans of up to £500,000.

Gary Booth, CEO of Tiuta, said: “This new product is perfect for those borrowers who are looking at buying a distressed sale, for example at an auction, at a reduced price compared to its open market value. It is great news for professional buyers, or even first-time buyers, looking to buy a property at a discount with a view to remortgaging it or selling on. In the current climate, remortgaging is taking a long time, which can prohibit some borrowers.”

The launch of Underbridge follows the launch at the beginning of June of Refurbridge. This allows borrowers to finance both the purchase price and the cost of refurbishing the property.

WLM Money Launched! 360degree packaging

WLM Money provide a cross sector financial packaging service, giving introducers more options for their clients having access to a wide variety of products including: Secured Loans, Bridging Finance, Commercial Loans, IVA Debt Management and Equity Release.

Darryl Dhoffer, Commercial Director, said: “In an even tighter market it is becoming increasingly difficult to raise finance for brokers clients. We have the resources to offer alternative options to enhance the clients chances of case completion where other packaging businesses fall down.

“Our 360 degree product range ensures that if your client is arranging finance, WLM Money are able to ensure it is YOU the that they turn to!. Partnering with WLM Money offers you the best chance of client retention”

Call today on 0800 0612820 to register or discuss a case. Alternatively, visit the WLM Money website for more information or to register online.