What makes our Alternative Overdraft stand out from the crowd?

Overdrafts – what are they?

Overdrafts serve as an invaluable financial tool, often referred to within the broader category of a revolving credit facility. An overdraft facility enables investors to access additional funds beyond their bank account’s existing balance, up to a predetermined limit. This facility is particularly useful for managing short-term liquidity needs, ensuring that investors can swiftly capitalise on opportunities or cover unexpected expenses without the constraints of their current cash flow. For example, covering unexpected expenses during renovations or for taking advantage of opportune property auction purchases.

Overdrafts are used to provide a flexible borrowing option that can be drawn upon as needed and repaid at the investor’s discretion, up to the agreed-upon limit. This fluidity allows property investors to maintain operational efficiency and financial agility. This can be used for both commercial and residential properties.

Furthermore, overdrafts are often used to cover the costs associated with property renovations and developments. This ensures that projects are not stalled due to temporary funding shortages. The ability to draw funds as required and repay them as income is generated from the property is crucial for maintaining momentum in such ventures.

The revolving nature of an overdraft distinguishes it from traditional loans. Unlike a term loan, which provides a lump sum that must be repaid over a fixed period, a revolving credit facility allows for continuous access to funds, provided the limit is not exceeded. This cyclical borrowing and repaying process affords property investors a high degree of financial flexibility. As a result, your client can more easily tackle the unpredictable nature of property markets and investment timelines.

The Alternative Overdraft

When looking to provide property finance for your client, having fast, flexible options is essential. The Alternative Overdraft provides a flexible loan which delivers funds on 24 hours’ notice, and allows borrowers the opportunity to draw, repay or reduce funds to match their needs. This swift access to funds is why the Alternative Overdraft is so popular amongst property investors.

Our Alternative Overdraft facility is perfect for site acquisitions, funding renovations and for property auction purchases. They can also be used to improve under-utilised commercial and residential assets.

These loans act as revolving line of credit and are available from £250k to £2m. The Alternative Overdraft can be used for 3 to 24 months with an LTV of up to 70%. On first charge, interest is from 1.05% per month on balance outstanding (accrued) for loans under £500,000. Furthermore, the interest is charged on the balance outstanding and can be serviced. It also avoids the expensive, repetitive setting-up costs associated with having multiple loans.

The Alternative Overdraft’s popularity amongst brokers

The Alternative Overdraft has proven to be very popular with brokers and their clients, attracting a number of 5-star reviews. Comments include “superb service”, “I cannot recommend them enough” and “very unique in the market and well structured.”

Jonathan Rubins, Director at Alternative Bridging Corporation, says: “The Alternative Overdraft is the ideal loan arrangement for the property industry and business community. It enables the peace of mind of being able to quickly access liquidity when it is needed, without additional charges or delay. At the same time, interest is only charged when funds are used.”

“We think it is best secured by first charge on under-utilised property assets or by first charge over commercial or residential and second charge over residential properties. But however it’s used, we know that the Alternative Overdraft can be a valuable tool in any investor’s toolkit.”

Brokers also comment on how having liquidity on tap is very convenient for their clients’. This was illustrated in one case where the client needed to refinance their buy-to-let portfolio through a standard term deal. With the funds from this refinancing then being used to repay the overdraft facility. By investing the news funds into their business when required, they were able to cover day-to-day operational expenses and acquire additional inventory for the company. As a result, the ability to withdraw funds as and when they were required, enabled the client to secure the maximum net advance possible, eliminating the necessity for retained interest. This case serves as a prime example of a successful use of an Overdraft to grow the clients’ property portfolio.

If you have any questions about how the Alternative Overdraft can help your client, don’t hesitate to get in touch with one of our BDMs today.