FREQUENTLY ASKED QUESTIONS
Your Questions Answered
WHAT IS A SUB-PRIME MORTGAGE?
A prime client is someone who is considered a low risk, and generally someone with a high credit score, who pays their bills on time. A sub-prime Client is usually classed as someone who has a few credit blips such as Missed or late payments on their credit cards/loans or utility bills.
WHEN SHOULD I REFINANCE?
Refinancing usually occurs when the client's existing deal runs out. The customer usually has a 6 months date for their mortgage offer to expire. They should consider speaking to their Broker 120 days before their existing mortgage expires, as to lock in a new rate.
Development Finance
What is development finance?
Development finance is specialist funding designed to help developers acquire land and fund construction costs. We structure the finance around the project, including the land, build costs, GDV and exit strategy.
How much development finance can I borrow?
The amount available depends on the land value, purchase price, build costs, GDV, experience and proposed exit. We assess the whole project to determine a realistic funding structure.
Can you finance land purchases?
Yes, we can explore funding for land purchases, including opportunities where planning is already in place or being pursued. The structure will depend on the site's value, planning position and intended development.
Can I get finance if I don't have planning permission?
Potentially, depending on the site, planning strategy, value and proposed development. We can assess the opportunity and identify the most appropriate funding route.
Can development finance cover the full build cost?
In some circumstances, lenders can fund a substantial proportion of construction costs, subject to their criteria and the overall deal structure. We assess the project's equity requirement alongside the available senior and specialist funding.
Can you fund multi-unit developments?
Yes, we specialise in structuring finance for developments ranging from individual plots to larger multi-unit schemes. The funding is tailored around the scale, costs, GDV and exit strategy of the project.
Land Finance
Can you help me work out what I can build on my land?
We can help you assess the proposed development and connect you with appropriate professional advisers where required. Understanding the planning, scheme, costs and GDV is fundamental to structuring the finance.
Can I buy land below market value?
Potentially, and below-market-value purchases can sometimes provide useful equity within a development structure. Each opportunity needs to be assessed against the purchase price, market value, planning and lender criteria.
Can you finance land with planning permission?
Yes, land with planning permission can potentially be funded depending on its value, purchase price and proposed development. We will assess the complete transaction rather than looking at the land in isolation.
Bridging Finance
What is bridging finance?
Bridging finance is short-term funding designed to complete property transactions where conventional finance may not be suitable or fast enough. We arrange specialist bridging solutions for acquisitions, refurbishments, planning opportunities, auctions and complex transactions.
How quickly can bridging finance complete?
Timescales depend on the property, legal work, valuation and lender requirements. Where the deal is straightforward and documentation is ready, specialist lenders can often move significantly faster than traditional finance.
Can bridging finance be used to buy land?
Yes, bridging finance can potentially be used for land acquisitions where the circumstances and exit strategy support the funding. We assess the purchase, value, planning position and intended exit before recommending a structure.
Can I use bridging finance to obtain planning permission?
Potentially, depending on the land, proposed scheme and overall funding strategy. We can structure finance around the opportunity and consider how the planning process affects the eventual exit.
Complex Property Finance
What makes a property finance deal complex?
Complexity can come from unusual properties, planning issues, difficult income, development structures, valuations, time pressures or unconventional exits. These are the situations where specialist structuring and access to the right lenders can make the difference.
What if my bank has declined my application?
A decline from a mainstream lender does not necessarily mean the deal cannot be funded. We can review the reasons for the decline and explore whether a specialist lender or alternative structure could work.
Do you deal with difficult or unusual properties?
Yes, complex and unusual property transactions are a core part of what we do. We look at the circumstances behind the property and structure rather than simply applying standard lending criteria.
Can you arrange finance for first-time developers?
Potentially, depending on the project, professional team, equity contribution and overall risk profile. We assess the development on its individual merits and identify lenders comfortable with the proposed structure.
Do you work with experienced developers?
Yes, we work with developers across a range of project sizes and structures. Experience can be an important part of a lender's assessment, particularly on larger or more complex developments.
SHOULD I GET A FIXED RATE OR ADJUSTABLE RATE LOAN?
This entirely depends on the current market and your plans over both the long term and the short term. If you are happy for monthly payments to remain the same, a fixed option may suit you better.
WHAT DOCUMENTS DO I NEED?
When you are going for a mortgage, you will always need the following documents.
Employed:
Proof of Address/ID
3 months Payslips
3 months Bank Statements
Credit Report dated within 3 months
Contract of Employment
Self Employed:
Proof of Address/ID
2-3 Sa302s (Tax Return)
3 months Bank Statements (Business and Personal)
Credit Report dated within 3 months
Company Accounts
WHAT IS THE PROCESS FOR GETTING A MORTGAGE?
The process for getting a mortgage is an often misunderstood process. There are a few steps involved that shouldn't take too long, with others that can take weeks or months, particularly near the end of the process at solicitor stage.
Broker Stage (1 week)
All documents are submitted to the Broker/Bank
Broker looks for the best deal based on your docs and circumstances, liaising with BDMs and Banks
Recommendation Stage (3 days)
Broker recommends the most suitable mortgage for your situation.
Valuation & Offer Stage (2 weeks)
If the terms of the mortgage are accepted, once affordability checks are done, the client accepts the recommendation and pays an App fee.
The Lender instructs a valuation on the property.
Once the valuation is complete the offer is sent out to the solicitors and the Borrower.
Solicitors Stage and Completion. (2 months)
The clients solicitor does the necessary checks to ensure the house can be sold to the buyer, or the bank can take "a charge" on the property.
The completion date is agreed when all checks are complete and fees are paid.
DO I NEED A SOLICITOR WHEN BUYING OR SELLING A PROPERTY?
In my opinion, you should always use a Solicitor when buying or selling a property, because it takes the risk out of your hands and allows the 'expert' to deal with your case. It also can help the process, as they should be in regular contact with your lender or Estate Agent once they are instructed to act on your behalf. The process can be tedious when involving Solicitors, but it is a vital part of the process and any outstanding queries should be chased up immediately, in writing and over the phone.
DO I NEED A DEPOSIT WHEN PURCHASING A PROPERTY?
A deposit is not always necessary depending on how you are purchasing. It can help to reduce the cost of the finance over a period of time (The higher deposit, less interest you pay). Purchasing a Below Market Value property with a bridge, may mean you do not need a deposit, but going onto a Term Mortgage, might mean you will need between 5-10% deposit to put down for your new property.
HOW DOES A BRIDGING LOAN WORK?
A bridging loan is known as short-term finance, and is used as such. Often, buyers use it to "bridge the gap" between selling their house and buying a new one. It can and had now been used in more innovative ways, such as, to purchase land and develop on it. The finance usually lasts 3-18 months and the interest is in three types (serviced, rolled up, retained). The term depends on whether you're using the bridging loan for a personal build or to develop houses, and sell them on.
Serviced: The monthly payments are made much like you would for a mortgage.
Rolled up: The interest is "rolled up" month to month including all fees and paid at the end of the term. The interest is effectively added to the loan and paid in one.
Retained: The interest is added together than taken at the end of the term. This can be more costly though as the interest is compounded over the term and paid in a lump sum.
Bridging finance is often used for development projects on BTL properties and commercial portfolios.
Rates are calculated monthly as I stressed earlier, and they also allow you to pay it all off at once.
WHAT IS A VARIABLE RATE?
Variable rates are ever more important in a climate where fixed rates are going up and mortgage payments are costing more.
A Variable rate is a rate that moves up and down according to the Bank Of England base rate. It is the Bank of England base rate + the rate the bank wants to charge you and is often called a "Tracker Rate". The variable rate moves up and down depending on what happens with the Base rate, they are usually a few points above that rate.
Often these rates are suitable for clients who want to change their mortgage options quickly, without incurring mortgage "Early Repayment Charges (ERCs)", which can often be up to 5% of the full balance of the mortgage left.
The rates aren't always suitable when the client needs to understand what their monthly payments they will be on a tight budget.
WHAT IS A FIXED RATE?
A fixed rate is a rate given to the client by the Lender. It is a rate fixed for 2, 3, 5 and even 10 years. When the Bank of England rate increases, this protects you against any rate rises from your own Bank. Around 2.4m people are coming off the fixed rates in the next year and need to fix back into a new rate.