Newsletter Articles

2022 has certainly started with a bang. As we progress along the road out of Covid restrictions and say goodbye to the post Stamp Duty holiday hangover, things are finally beginning to move. After the lull we saw in the last quarter of 2021, savvy investors are now actively looking for opportunities in the property market and this is leading to an increasingly competitive environment.

For example, Rightmove reported its busiest January on record for home-mover activity, with buyer demand up 16% compared to January last year, and 24% compared to January 2020.

The property website added that buyer enquiries about homes for sale increased 16% compared to last year, 24% compared to 2020, and 41% compared to 2019, highlighting just how competitive the marketplace is at the current time.

The rental market has had an equally upbeat start to the year, with tenant demand 17% higher than last January, and 33% higher than January 2020.

In a market like this, investors need to be able to act quickly in order to make the most of the available opportunities and bridging finance is often the first port of call for investors who have spotted a property that they want to snap up. It enables them to purchase property quickly and also finance refurbishment if required. With keenly priced rates and ever-increasing LTVs, the bridging finance market has started the year with a surge in applications.

Of course, not all lenders are created equally. The market is awash with providers offering bridging finance and right now we appear to be entering yet another price war. When you’ve been operating in the marketplace for 30 years, as we have – you will have seen it all before. In a rush to build lending volumes quickly, providers slash rates and then often see their service severely dented as they fail to deal with the demand that their pricing has created. That’s what I expect to see here and don’t be surprised to see a few lenders lose their funding lines as a result either.

For investors looking to snap up properties quickly, certainty is key. People want to know as soon as possible that they can secure the funds. But equally, they need certainty that the funds will be available at the time that they need them. There have been plenty of stories in the financial press over recent months of lenders stepping it to come to the aid of a borrower who, at the eleventh hour, has seen their bridging lender pull out of the deal. Sadly, this is an all too frequent occurrence and one that is immensely frustrating to investors and brokers.

Now, while bridging does not come with anywhere near such a long and drawn-out process as residential mortgages, there is nevertheless an application process that has to be completed. This is the case even if you’re a return customer. Any delays here and investors could miss out on a golden opportunity.

That’s why we have the Alternative Overdraft. It offers a flexible drawdown facility that provides liquidity whenever a borrower needs it. The facility can be drawn upon and repaid time and time again and provides the perfect overdraft for real estate, property auctions, site acquisitions or to fund work-in-progress.

The Alternative Overdraft is available for two years and then subject to review which can be secured by first charge over commercial or residential and second charge over residential properties. Interest is charged on the balance outstanding and can be serviced or accrued. Loans are available from £250,000 to £3m and enable under-utilised assets to play a prominent role in the investor’s finance arrangements.

Investors need an array of options these days if they want to be able to move swiftly and decisively, and we’ve seen great interest in our Alternative Overdraft from borrowers looking to secure property. There’s no need to miss out on a deal ever again because the process took too long.

For more details, please talk to us.