Bridging Loans
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Bridging loans on the rise amid tougher lender criteria – MTF

Brokers have reported a jump in bridging loans volume, as borrowers struggle to secure mortgages from mainstream lenders, according to research.

Almost two-thirds of brokers reported a rise in bridging volumes in the third quarter of 2017, up from under half in the three months previously, a survey by lender MTF showed.

It comes as borrowers are hit by tougher restrictions from mainstream lenders, MTF said.

The regional spread of demand for bridging loans has also widened, with more demand in Scotland and Northern Ireland, according to the survey.

Overall, the South East was found to have the biggest demand for bridging loans, followed by London.

Development projects and business purposes are the most popular reasons for taking out bridging loans, accounting for 30% and 17% respectively.

The bridging loan process took longer than it did 12 months ago, according to two-thirds of brokers surveyed.

More than half said completion took more than three weeks and fewer than one in five reported the process as between one and two weeks.

Speed is of the essence

Almost three-quarters of brokers surveyed blamed solicitors as the main reason for delay, with the value also causing problems for around one in ten.

James Anderson, head of new business at MTF, said: “Bridging loans remain an important financial tool for borrowers and demand continues to grow.

“Speed has always been a vital element in bridging finance and it is important that solicitors understand what is required, so that bridging finance requests can be completed as quickly and accurately as possible.

“There are some excellent firms of solicitors to choose from and many bridging loan lenders, like MTF, use a panel of pre-approved firms to help speed up a bridging loan transaction for the applicant.”

Source: Mortgage Solutions

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UK bridging finance hits pre-Brexit high

Bridging finance provider West One’s latest index, released on Tuesday, showed that gross annualised lending increased from £4.3bn in the second quarter to £4.7bn – exceeding 2016’s pre-EU referendum high of £4.4bn.

UK BRIDGING lending rose to a pre-referendum high of £4.7bn in the third quarter, according to new research.

The index, which uses the company’s data as well as statistics published by the Association of Bridging Professionals and other UK bridging loan providers, also found that the emerging trend of smaller transaction sizes had continued into the third quarter.

Average loan sizes within the bridging finance sector dropped below £600,000, compared to averages above £900,000 at the same time last year.

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This reflects the relatively depressed market for high-end properties with values over £1m, particularly in London, West One said.

However, there has been a large volume of smaller transactions, meaning that total lending held up well in the third quarter as the figures show.

West One predicts a further rise in bridging rates in the fourth quarter, although the sector remains highly competitive.

Read more: Funding Circle borrowers back joining European Free Trade Agreement post-Brexit

“The bridging sector has performed well during the third quarter, despite the backdrop of concern around the progress of Brexit negotiations, and economic indicators pointing to both a slower economy and to the interest rate rise that ultimately came in November,” said Danny Waters, chief executive of West One’s parent company Enra Group.

“Whatever happens next, the industry must continue to adapt to conditions, and provide the diverse and flexible funding options that property professionals need, so they can take advantage of the changing, regional landscape that we are seeing develop.”

Read more: Want to invest in property? Then take a look at these peer-to-peer platforms

Source: P2P Finance News

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65% of brokers report bridging loan volume increase

Almost two-thirds of brokers (65%) have noticed an increase in bridging loan volume in Q3 2017, a rise on the 48% who reported growth during Q2 2017, according to recent research.

The latest broker sentiment survey conducted by bridging lender MTF has revealed that bridging finance continues to assist borrowers who are struggling to obtain loans from mainstream lenders which have introduced tougher lending restrictions.

The geographical spread of bridging loan demand has also expanded in the third quarter, and for the first time 9% of the 96 brokers surveyed highlighted an increase in demand in Scotland and Northern Ireland.

The South East witnessed the biggest demand for bridging loans in the UK (48%) for the fourth consecutive quarter, although this represented a decline from the 62% registered in Q2.

The second highest area for demand was London at 25%.

Funding development projects was the most popular reason for obtaining a bridging loan (30%) for the fourth consecutive quarter, followed by business purposes (17%).

Some 69% of brokers claimed the bridging loan process took longer than it did 12 months ago, while 45% said it took less than three weeks to complete such a loan.

Almost a fifth (18%) cited a duration period of just one to two weeks, while 55% said it took in excess of three weeks.

James Anderson, head of new business at MTF, said: “Bridging loans remain an important financial tool for borrowers and demand continues to grow.

“Speed has always been a vital element in bridging finance and it is important that solicitors understand what is required, so that bridging finance requests can be completed as quickly and accurately as possible.

“There are some excellent firms of solicitors to choose from and many bridging loan lenders, like MTF, use a panel of pre-approved firms to help speed up a bridging loan transaction for the applicant.”

Source: Bridging and Commercial

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Bridging sector grows in Q3

The UK’s bridging sector continued its healthy growth of 2017 with another strong quarter’s performance, yielding a new high of £4.7bn in the year to Q3, West One’s Bridging Index showed.

The latest edition of the quarterly report revealed that gross annualised lending increased from £4.3bn in June to exceed 2016’s pre-EU Referendum high of £4.4bn.

The bridging sector has recovered from the slump in the Q3 of 2016 that followed the referendum result.

Marie Grundy, sales director of West One, said: “2017 has proven to be a strong year for bridging finance, with a clear return to form after the post-Referendum turbulence this time last year.

“Seeing further robust new business performance in a quarter that includes the typically-quieter summer holiday period is very encouraging.

“The wider property and property finance markets have flattened against continued political uncertainty due to slow progress negotiating Brexit, and the prospect of interest base rate rises finally arriving.

“This new market high therefore reflects the underlying strength of bridging.

She added: “We believe there is still that slack in the market and expect that the bridging market will continue to this pattern of solid growth, despite some slowing in the housing market.

“With pockets of growth outside London and the South East, we anticipate seeing more of that growth regionally.”

Trends in the bridging market

The emergent trend in the first half of 2017 of smaller transaction sizes has continued through Q3.

Average loan sizes dipped under £600,000 compared to averages in excess of £900,000 at the same time last year.

There were less large transactions coming to market, reflecting the relatively depressed market for high-end properties with values over £1m, especially in London.

s performance figures from different sources pointed to more upbeat property markets in some regional hotspots such as the East Midlands or Greater Manchester, it seems property investors are focusing on deals in those regions, with typically smaller ticket sizes.

The regional picture

Between actual residential property and property finance data, and forward-looking expectations data, varying patterns emerge.

Nationwide and RICS found the wider South East of England has also become more subdued in price growth, with a markedly negative outlook.

But UK Finance’s regional mortgage data showed mortgage lending in the London region at 10% more than that of Q3 2016.

Data for house prices identify both East and West Midlands as hotspots for annual price growth, alongside the South West, where supply is highly constrained.

The wider South East region is still showing growth, albeit at a slowing rate.

Savills research identified Midlands locations like Birmingham City, Leicester-Nottingham and Northampton and pockets in Scotland like central Glasgow and the Galashiels area of Edinburgh commuter hinterland.

With central Manchester also shining a light for the North West of England, this indicates the opportunities that investors are starting to exploit, where they know the local market.

Taking forward-looking sentiment data into account, other regions came to the fore, suggesting further scope for agile investors to grasp emerging opportunities.

September’s RICS residential market survey of members pointed to likely buoyancy in the North West, Scotland and Wales, with positive Q3 sentiment across a range of measures from price expectations to new enquiries and listings. This suggested positive market conditions will continue in the East Midlands and South West.

Bridging interest rates

Interest rates in Q3 recovered slightly from Q2’s low of 0.96%, returning to just above 1% per month.

With Bank of England base rate changes widely expected for some months ahead of the 2nd November 0.25% announcement, it is likely that the market had already begun to factor this shift in.

The report predicted a further rise in bridging rates during Q4.

Danny Waters, chief executive of Enra Group, said: “The bridging sector has performed well during Q3, despite the backdrop of concern around the progress of Brexit negotiations, and economic indicators pointing to both a slower economy and to the interest rate rise that ultimately came in November.

“Whatever happens next, the industry must continue to adapt to conditions, and provide the diverse and flexible funding options that property professionals need, so they can take advantage of the changing, regional landscape that we are seeing develop.”

Source: Mortgage Introducer

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Short Term Loans Solutions in the UK

If you have to pay unexpected expenses urgently, you may consider using short term loans, often referred to as payday loans or payroll deductible loans in UK. These are quick and effective punctual solutions. At the same time, if they are not used with care, they can cause more financial problems. If you think that a short term loan may be useful for you, you should learn as much about the subject as possible and evaluate its advantages and disadvantages before making an application. Use this guide to make the right decision as a borrower.

With short term loans, you can get cash quickly. This is to your advantage. You will have a sufficient amount of money to solve the financial emergency that you are experiencing. These loans are fairly easy to obtain as well. Most lenders have flexible qualification criteria and some do not even perform credit checks. When you borrow the money, you will have to leave a cheque on the loan amount plus interest and fees with the lender. The lender will cash it on your next payday. This way, you will pay off your debt automatically. It is possible to negotiate an extension of the repayment term, but you will continue to pay interest and other charges may apply as well. As a result, the loan will become more expensive and harder to repay. You will find that short term loans are some of the most expensive lines of credit available to consumers and UK-based companies. They, mostly, use payday UK login.

The APR (annual fee) which shows the total cost of the loan can be several hundred percent. The interest rates are high and so are the fees charged by the lenders. If you use a loan of $ 100, for example, and you have to pay it in two weeks, you will have to pay $ 120 to the lender. If you do the calculations, you will find that the APR on this loan is 426%. This is higher than the APR in traditional personal loans. The main disadvantage of short term loans is its high cost. If you find it difficult to pay what you owe, you can ask for more money or extend the term of the loan, but this can only make you into more debt. Eventually, you may end up in a debt trap that is hard to leave. Short term loans are not suitable to use when you do not have enough income to pay your expenses.

If you use them to fill the gaps in your budget, you will have even lower disposable income over the next month. They can be useful only as punctual solutions when financial emergencies arise. If you have to pay an unexpected medical bill or to buy a new refrigerator, you can use such a loan with confidence. You’ll have to manage on a smaller budget over the next month, but the situation will return to normal after that.

Source: Feast Magazine

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ASTL members up lending by 39% year-on-year

Association of Short Term Lenders firms (ASTL) increased the value of bridging lending by 38.9% in the third quarter of 2017 compared to the same quarter in 2016.

However lending saw a small fall of 2.7% from the second quarter of this year.

Benson Hersch (pictured), chief executive of the ASTL, said: “The figures from our members show that the bridging finance industry is in excellent shape.

“It shows that the industry has remained resilient despite the threat of Brexit and low growth in the economy.

“The figures also demonstrate that bridging loans remain an excellent alternative where traditional financing is not immediately available for customers.

“The bridging sector therefore continues to provide a vital role in the economy by offering customers access to the capital they need in a responsible and sustainable way.”

The value of their loan books stand at £3.5bn after rising by 27.7% from the end of Q3 2016 to Q3 2017.

Source: Mortgage Introducer

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Are Short-Term Loans Cheaper Than Overdraft Fees?

There’s been a lot of news recently about overdraft fees — the fees charged by banks to their account holders after an account dips below a £0 balance, meaning the account holder has a loan balance, even if small, from the bank.

Earlier this year, The Telegraph published its “worst offender” index, listing banks that charged the highest overdraft fees for their customers.

Santander was one of the top offenders, with an unarranged overdraft fee of £6 per day capped at £95 per month. On arranged overdrafts of up to £2,000, Santander charged daily fees of one pound per day; rising to £3 per day for overdrafts of £3,000 and above.

Other banks were similarly expensive. Borrowing money on overdraft from Halifax could result in charges of up to £3 per day, according to the July 2017 article. Unarranged overdrafts incurred a whopping £5 per day fee, capped at a maximum of £100 in overdraft fees per month.

RBS and NatWest also charged heavy unarranged overdraft fees, with an £8 per day fee limited to a total of £80 per month.

With as much as £100 in monthly overdraft fees from many bank accounts, it’s been suggested that borrowing money through short-term loans could be a more affordable option for people in need of quick access to cash.

The numbers seem to agree. An August 2017 article in The Guardian calculated that many of the most widely used bank accounts in the UK charged APR rates of up to 52%, making them more expensive — in certain cases, depending on borrowing habits — than payday loans.

Banks, to their credit, appear to be changing their overdraft fee structures in an attempt to make borrowing less expensive for customers. However, many have admitted that as much as 10% of account holders could end up paying more for overdrafts under the new fees.

Despite public warnings about short-term loans, it turns out that overdrafts — even if used rarely and responsibly — could be a far bigger cost for many British bank account holders.

For example, a loan of £300 over 3 months from a short-term loan provider such as Mr Lender, results in a total repayable of £444.00 (£300 capital and £144.00 interest*) at an interest rate of 0.8% per day on outstanding capital.

The same amount borrowed via an unarranged overdraft could result in £300 in fees through a high street bank using many of the fee structures listed above.

Public perception of borrowing money — and the true costs of borrowing money — isn’t always in sync with financial reality. For years, borrowing from the bank has been viewed as a safe, cheap way to access finance; borrowing from a short-term lender has been viewed as the opposite.

The reality, however, is that the best loan for your personal circumstances may not come from the source that you first think of. Study and compare interest rates and fees and you could find that borrowing money via short-term loans is more cost effective than using your bank overdraft.

Source: News Anyway

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Bridging loan volume dips in Q3

Bridging volumes fell by 4.9% in Q3 but remain some 2% higher than last year, data from Bridging Trends has shown.

The firms that contribute to Bridging Trends reported that gross lending had dropped to £142.75m

The split between first charge and second charge lending stood at 82% and 18% respectively indicating consistent investment in residential properties-to-let.

And Joshua Elash, director at MTF, said in regards to unregulated bridging continuing to dominate the landscape: “The implementation of the Prudential Regulatory Authority’s rules relating to the treatment of portfolio landlords means this upward trend is likely to continue for the foreseeable future.

“Increasingly larger number of professional property investors will consider bridging finance when purchasing a new property which they otherwise intend to refurbish and sell.”

Chris Whitney, head of specialist lending at Enness Private Clients, added: “I think when you keep in mind the fact that this was over the summer holiday, a drop of only about 5% in lending volumes compared to the last quarter is actually quite impressive.

“I was surprised the average interest rate hadn’t fallen further than it has. We have seen pricing under quite a bit of downward pressure as certain lenders fight to increase market share and protect what they already have from new entrants.”

Additionally the data found that mortgage delays were the most popular reason for taking a bridging loan and the average duration of a loan stood at 12 months.

Average LTV levels reached almost 50% with the average monthly interest rate across first and second charge lending decreasing to 0.82% from 0.84%.

Source: Mortgage Introducer

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Bridging in probate

Bridging loans are incredibly flexible and may be put to a variety of uses including resolving probate issues when concluding a will.

When a will is presented between various parties, it can throw up financial hurdles. There are numerous benefits to be gained by fast tracking the settlement process and using a short-term finance solution to meet resolution.

Annual bridging lending grows for third consecutive quarter

By using bridging, beneficiaries of a will are able to pay legal fees and inheritance tax straight away, releasing 70% of the value of the property immediately without making any interest payments which are covered by the loan facility.

This ultimately allows the beneficiary to market the property for a longer period of time to maximise its value which will be far greater than the interest payments on a bridging loan, rather than discounting the property for a quick sale or through auction.

Resolving debts

Carrying out someone’s will is not always as straightforward as we might like. Although the ownership of their various assets might be easy enough to resolve, the average person will take on a network of debts and credits which must be resolved in their will.

Bridging finance offers a person’s family some breathing space and they can use the loan to pay off debts instead of being forced to sell assets as quickly as possible. Bridging lenders are also highly flexible and quick to put solutions in place. There’s no red tape and it’s possible to create a loan structure that’s perfectly suited to individual circumstances

In many ways, a bridging loan for probate finance is very similar to a standard bridging loan. The loan will generally be for a short fixed term, commonly less than 12 months (though longer terms are available), and can be of any value from tens of thousands to tens of millions of pounds.

Inheritance tax

When concluding a will, beneficiaries will inevitably face tax implications which must be factored into the overall process. Again bridging can help streamline and manage this inevitable challenge by providing a quick fix solution.

Many estates in the UK become liable for inheritance tax, which must be paid within six months and typically a 40% share of the estate upon liquidation. Again, this financial pressure can be eased through the use of bridging finance, as it enables the will’s executors to restructure and refinance to meet the cost of inheritance tax.

Conclusion

Without bridging finance it would be very difficult to resolve the financial affairs that can be brought about in a deceased person’s will.

The time pressures that quickly become apparent would require that many estates be quickly broken down and sold, rather than being realised at their full value. Bridging loans are therefore a helpful tool that enables individuals to pass on their wealth through generations, and allows inheritors to benefit more from their parent’s estates.

Source: Mortgage Introducer