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Swift Financial Rescue

Posted on | by Damien pepper

In the fast-paced world of property auctions, timing is everything. A recent client faced a daunting challenge when her initial funding for a dream residential property fell through, leaving her just days away from potentially incurring daily charges due to missed completion dates.

Clever Lending’s Matt, whose expertise in regulated bridging finance turned a potential financial disaster into a triumphant success story. This case study delves into the intricacies of securing bridging finance under tight deadlines, showcasing the power of collaboration, swift action, and innovative solutions like Automated Valuation Models (AVM) to achieve remarkable outcomes.

Join us as we explore how Matt and Together Money navigated the complexities of the situation to ensure a seamless transaction, highlighting the value of professionalism and efficiency in the lending industry.

Case Study

 LenderBalancePaymentRateProductLTVTerm
Regulated Bridging FinanceTogether£91,866.42N/A1%Regulated Bridging Finance65%12 months

Enquiry

This case was introduced to Matt to give advice to the client for a regulated bridging. The client purchased her new residential property at an auction and her initial funding arrangement fell through 5 days before the final completion day of the auction terms. The client was introduced to Matt with 4 days to go before completion or the client would face a daily charge for any days after the final completion date. The exit route will be a residential re-mortgage.

Solution

Matt placed this case with Together Money using an AVM valuation to speed the case to completion as quickly as possible.

  • Monday 4th March at 2pm called client and completed factfind and ran an AVM valuation which had a confidence level of 6.
  • Tuesday 5th March fully submitted the case to Together.
  • Thursday 7th March the case completed, and the client did not incur any additional auction house charges.

This was only possible through all parties working together with the same goal in mind.  This is proof when likeminded professional, efficient and knowledgeable colleagues work together can achieve great things.

New Beginnings: A Bridging Finance Success Story

Posted on | by Damien pepper

In the dynamic world of property transactions, timing is everything—especially when it’s about making life-changing moves. This case study highlights how our specialist lending solutions, specifically our Regulated Bridging Finance, facilitated a seamless transition for an 83-year-old client eager to downsize from a 4-bedroom property to a more manageable 2-bedroom home.

Facing the challenge of securing her new home without having sold her current property, she turned to us for a solution that would bridge this gap without the pressure of immediate sale.

Through our partnership with Greenfield and our commitment to navigating complex scenarios, including unexpected probate delays, we not only provided the financial bridge our client needed but also the peace of mind that her move would be on her terms.

Case Study

 LenderBalancePaymentRateProductLTVTerm
Regulated Bridging FinanceGreenfield£274,452.45N/A0.75%Regulated Bridging Finance37.85%12 months

Enquiry

This case was introduced to Matt to give advice to the client for a regulated bridging. The client (83 years old) was looking to downsize from a 4-bed property to a 2-bed. She wanted the bridging loan to be secured against her current property because she hadn’t yet found a buyer and didn’t want to lose out on the purchase of the new property. Exit would be sale of the 4-bed property.

Solution

Matt placed this case with Greenfield as this lender had competitive rates and would be able to complete quickly.

It transpired once the lender’s application pack had been issued that the client was awaiting grant of probate which meant the application was put on hold because the required valuation would only be valid for 3 months.

Probate was granted 11th December, 8 months after this case was put on hold. The lender was very patient and keep this case open for the client. A new ESIS with the revised rate were provided and the valuation arranged. Legals were instructed early January and completion could have taken place early February but was delayed by the vendor to allow time to move out.

Understanding the complexities of rebridging

Posted on | by Damien pepper
by: Matthew Dilks, bridging and commercial specialist, Clever Lending

Bridging loans have always proven to be a popular form of short-term financing, helping borrowers meet tight deadlines, buy a property at auction, prevent a purchase from falling through or provide the funds to support renovation and development projects.

In the majority of cases, the length of the term attached to the bridging loan is more than sufficient in helping the client achieve their desired outcome and exit the bridging loan as planned. However, there are times when a project may go wrong, which can leave the borrower unable to repay the loan on the due date.

There are a number of reasons why a borrower may find themselves unable to exit a bridging loan on time, including delays to the building works, difficulties around planning permission or a buyer pulling out of the purchase at the last minute and causing the property chain to break down. In some cases, a borrower’s inability to repay the loan could be due to the fact that the length of the term on the original bridge was simply too short.

While gaining an extension to the existing loan will usually be achievable, provided there is a solid case for being unable to repay the loan on the planned due date, there are times when a bridging lender may decline an application for an extension and leave the client searching for an alternative solution.

It is here that rebridging comes into play, by allowing borrowers to refinance an existing bridging loan by taking out another bridging loan to cover the debt. Although placing rebridging business can be a challenge, it is certainly not impossible provided the client has a legitimate and detailed explanation as to why they failed to service the original loan.

Not all lenders are willing to refinance an existing bridging loan, which is where enlisting the help of a specialist lending broker such as Clever Lending can help. With more than 25 years of experience in the specialist mortgage market, Clever has the expertise and knowledge needed to help those borrowers looking to rebridge achieve their desired outcome.

Good explanation ‘essential’ for rebridging

In every rebridging case, a good explanation as to why the initial loan hasn’t been repaid is essential. This includes detailed solid reasoning as to why the rebridge is needed, how long it is needed for and if any capital raising is required. Not all rebridging lenders will permit capital raising and will only cover the existing loan penny for penny plus fees.

Some may consider capital raising on a rebridge as long as the property has increased in value or it wasn’t a high loan-to-value (LTV) bridge to begin with. They will, however, go into a bit more depth on the exit route, given that it is not the first time a bridging loan has been taken out against the property.

One of the downsides to rebridging is that rates tend to be more expensive and the borrower also incurs additional costs such as lender and valuation fees. However, the upside is that they will most likely secure a 12-month term, giving them enough time to complete their objectives and get out of a sticky predicament.

There will of course be situations where a rebridge is not possible or the best advice for the client, particularly if the borrower is already maxed out on a higher value LTV and is unable to add additional security to the loan. In this situation, selling the property would be the preferred option as rebridging would not be a viable solution.

Given the complexity involved in securing a rebridging loan, seeking advice from an experienced broker well-versed in the nuances of the sector is crucial. Brokers unfamiliar with this area of the mortgage market can refer their clients to a specialist broker like Clever Lending to carry out the work on their behalf and help them secure the most suitable option for their rebridging needs.

Tapping into semi-commercial opportunities

Posted on | by Neil Alexander

By Matthew Dilks, bridging and commercial specialist, Clever Lending

It has been a tough few years for buy-to-let (BTL) landlords with higher interest rates, tighter affordability and changes to the way BTL income is taxed eroding profit margins and reducing yields, forcing many to scale back on planned projects while others look to divest their stock.

The last 12 months in particular have been significantly challenging, with the effect of 14 consecutive base rate rises taking a toll, leaving many landlords with higher mortgage repayments and underperforming assets as they try to find ways to drive down costs and navigate the higher interest rate environment.

For investors and landlords looking to broaden the scope of their property portfolio in 2024, seeking out opportunities in the semi-commercial mortgage market could prove to be a fruitful way of maximising profit and diversifying their income stream by offering the potential to earn higher rental yields than standard BTL properties.

Semi-commercial properties are sometimes referred to as mixed use properties as they can include flats above shops, restaurants or offices; guest houses or B&Bs with living accommodation attached for the owners; pubs with self-contained accommodation upstairs; or buildings with both self-contained flats and offices.

One of the many benefits of the semi-commercial market is that it offers the perfect blend of both commercial and residential use, enabling landlords to earn revenue from two different asset classes within the same property.

This can be an attractive proposition in the current economic climate as it can help landlords mitigate the risk of an underperforming asset and enable them to make up any shortfall in rental yields with a mixed use property.

Another benefit is that the leases on commercial premises are often taken out for longer than those on residential properties which, in many cases, can range from between two to 25 years. This means landlords can be assured of a steady rental income stream from any commercial business that rents the property out over the term of the lease.

In some cases, this may also mean the property will require less maintenance and refurbishment as the tenant will be in the premises for a longer time than a standard residential tenant, and an update will not be needed as frequently. However, this is not always guaranteed and will obviously depend on the terms and conditions agreed in the rental lease.

Tapping into the semi-commercial market could also prove to be a useful stepping stone into the commercial property market further down the line, helping landlords and investors broaden the scope of their investment portfolios even further when they become more familiar with this area of the property market.

However, as with all types of property investment, there are some important considerations to take into account when deciding to purchase a semi-commercial property, such as the fact that the initial outlay is often higher than in residential purchases or that business rates will still be charged if the property is vacant.

Given the complexity of this area of the market coupled with the fact that not all lenders offer mortgages for this kind of investment, some brokers may find themselves in unfamiliar territory should they encounter a client looking to tap into this area of the mortgage market.

In cases such as these, referring your clients to a specialist master broker such as Clever Lending will not only ensure they receive the advice, support and outcome they need to diversify their portfolio, it will also enable you to focus on the more familiar areas of the business while earning a passive income for referring the client.

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Clever Lending’s Matthew Dilks Wins UTB Specialist Award

Posted on | by Damien pepper

Clever Lending, the specialist finance packager and master broker, has announced that Matthew Dilks, one of its commercial and bridging specialists, has been recognised for his talents by United Trust Bank (UTB).

Dilks, who has worked at Clever Lending for nearly six years, was presented with UTB’s ‘Specialist of the Year’ award at a recent dinner the bank held for its key introducers in the North of England.

UTB gave awards to individuals in each region, rewarding their unique skillsets.

Dilks was recognised for his expertise in bridging finance, having successfully placed many cases with UTB over the years. At Clever Lending, he is primarily tasked with helping clients and brokers source financing for bridging loans, commercial mortgages, development finance, and buy-to-let properties and portfolios.

Matts Award and hamper

Paul Delmonte, key account manager at United Trust Bank, commented:

“Matt fully deserves the recognition from this award. Over the years we’ve worked very closely together on a number of transactions that has helped his clients reach their goals.

“Working with Matt is an absolute pleasure. His attention to detail and understanding of lending criteria is of the highest standard. I’m really looking forward to continuing working with him and the Bridging team going forward”

“We worked closely with the lender and client to ensure a positive outcome, once again showcasing Clever Lending’s ability to get results for our broker partners.”

Matthew Dilks, commercial and bridging specialist at Clever Lending, added:

“I was genuinely touched to receive this award from United Trust Bank – to be recognised for my skills by a leading bridging lender is very gratifying.

“At Clever Lending, I’ve worked closely with UTB on many cases and they are excellent to deal with, always happy to go the extra mile to get the right result for the client. In my mind, this award also recognises the team at Clever Lending who all play their part in getting difficult bridging cases successfully completed.”

Mobile home to Scottish home, using regulated bridge finance

Posted on | by Damien pepper

Clever Lending, the specialist finance packager and master broker, has announced that it has recently packaged a £180,800 regulated bridging facility for a residential property purchase in Scotland.

The clients had spent several years travelling across the UK in a mobile home before deciding they wanted to purchase a residential property in Scotland. They elected to use bridging finance to complete the purchase quickly.

Their exit strategy was to drawdown one of their pensions on their 55th birthday, which was around six months into the life of the bridging loan.

Matthew Dilks, Commercial and Bridging specialist at Clever Lending, placed the case with a lender that he knew would meet the customers’ requirements: it would lend on properties in Scotland; it would use a simple valuation and also offered competitively-priced regulated bridging rates.

Clever Lending worked closely with both the clients and lender in order to complete the loan within eight weeks. It required several workarounds, including the use of Scottish ID verification and the offer letter detailing Scottish law rather than English law.

The regulated bridging loan was for 12 months at a loan to value (LTV) of 49%, with a rate of 0.64% per month.

Matthew Dilks, commercial and bridging specialist at Clever Lending, commented:

“Regulated bridging finance is a popular solution but not one that is offered by all bridging lenders, while even fewer are willing to lend in Scotland.

“As a master broker with expertise in bridging, we have close relationships with a wide variety of lenders, meaning we can place those cases which others struggle to handle.

“We knew of the ideal lender with this application and they worked quickly to assist the clients in progressing the case without delay, despite the issues with Scottish law.”

The lender, added:

“This transaction demonstrates the banks flexibility perfectly when it comes to Bridging Finance and shows our ability to be able to move quickly to get cases funded.

“It’s always a pleasure to work with Clever Lending on any transaction. We have worked closely over the years which has helped us develop a fantastic working relationship which really adds value.

“We are looking forward to continuing our strong working relationship in the years to come.”

Clever Lending completes regulated bridging loan in Scotland

Posted on | by Damien pepper

Clever Lending, the specialist finance packager and master broker, has announced that it has recently packaged a £180,800 regulated bridging facility for a residential property purchase in Scotland.

The clients had spent several years travelling across the UK in a mobile home before deciding they wanted to purchase a residential property in Scotland. They elected to use bridging finance to complete the purchase quickly.

Their exit strategy was to drawdown one of their pensions on their 55th birthday, which was around six months into the life of the bridging loan.

Matthew Dilks, commercial and bridging specialist at Clever Lending, placed the case with United Trust Bank (UTB) as it met a number of requirements: it would lend on properties in Scotland; it would use an AVM valuation and also offered competitively-priced regulated bridging rates.

Clever Lending worked closely with both the clients and lender in order to complete the loan within eight weeks. It required several workarounds, including the use for Scottish ID verification and the offer letter detailing Scottish law rather than English law.

The regulated bridging loan was for 12 months at a loan to value (LTV) of 49%, with a rate of 0.64% per month.

Matthew Dilks, commercial and bridging specialist at Clever Lending, commented:

“Regulated bridging finance is a popular solution but not one that is offered by all bridging lenders, while even fewer are willing to lend in Scotland.

“As a master broker with expertise in bridging, we have close relationships with a wide variety of lenders, meaning we can place those cases which others struggle to handle.

“We knew UTB would be the ideal lender with this application and they worked quickly to assist the clients in progressing the case without delay, despite the issues with Scottish law.”

Paul Delmonte at United Trust Bank, added:

“This transaction demonstrates the banks flexibility perfectly when it comes to Bridging Finance and shows our ability to be able to move quickly to get cases funded.

“It’s always a pleasure to work with Clever Lending on any transaction. We have worked closely over the years which has helped us develop a fantastic working relationship which really adds value.

“We are looking forward to continuing our strong working relationship in the years to come.”

Understanding Gross Development Value calculations

Posted on | by Damien pepper

By Matthew Dilks, Bridging and Commercial Specialist, Clever Lending

In the property investment and development world, gross development value (GDV) is an important metric used to determine what a project may be worth on the open market once all the planned works have been completed.

Significance of GDV

Gross development value is a significant calculation as it is the foundation on which all other aspects of a build are determined. This includes the cost of acquiring the development site, the cost of construction and other associated works, the profit margin of the developer or investor and the likelihood of a successful and profitable financial outcome.

Stephen Henman, Managing Director at Method Valuation UK, said:

“The way in which GDV is calculated is extremely complex and can prove to be a minefield for many brokers, particularly those unfamiliar with working in this area of the specialist lending market.”

“At Method we see at close quarters the impact of the complex nature of GDV calculations. This can occasionally cause friction during the valuation process and is exacerbated by current market conditions,” he says.

“It’s important that brokers and lenders are fully aware of the contributing factors to the GDV calculation, particularly the impact of the developers anticipated profit margin on the GDV.”

Lender-Specific Criteria

Understanding the way in which lenders calculate GDV is crucial to securing funding in any development finance project because it can vary hugely between projects and also differs vastly from the standard loan-to-value (LTV) ratios used in residential mortgage loans.

Different lenders also use different methods to determine affordability, with the most common being the GDV plus costs. This can typically be between 50% to 70% GDV plus up to 100% of the construction and development costs, but will depend on the size of the deposit, the experience of the developer, the feasibility of the project and the planned exit strategy.

Each lender also has its own lending criteria as well as a minimum and maximum on borrowing amounts, which can range between £50,000 and £50 million. Proof of a solid exit strategy will also be critical as your ability to sell or remortgage the development will also determine the GDV value.

As a general rule, lenders like to see an expected 20% minimum profit built into any development plan, with the GDV calculation split into thirds across the purchase cost, the cost of works and projected profit.  Examples of this can be seen in the figures below, with example 1 showing the three splits and example 2 showing a 20% profit.

Day One Valuation

Lenders also tend to work backwards from the GDV calculation to work out the current valuation for day one of the lend and will deduct any expenses, development costs and contingency costs built into the calculations which can result in a lower valuation than what the client may expect.

Understanding this is crucial as it can sometimes be an issue on day one of lending as clients may find the current value to be quite a bit lower than what they expected. This is an important factor to take into consideration as it could impact the project and cause delays. 

Seeking Expert Guidance

Calculating GDVs is an extremely complex process so brokers who are unsure of how a case should progress, should talk to a trusted development finance expert who can help them through the process. This will not only help to alleviate the pressure of placing the business, but also ensure they are providing their clients with an accurate GDV calculation on any planned development finance project.

In the Spotlight – Mark Colyer, Commercial and Bridging Case Manager, Clever Lending

Posted on | by Damien pepper

Tell us a little bit about yourself and your role at Clever Lending?

I am a commercial and bridging case manager at Clever Lending and have been with the business for just over five years. Previously, I worked in finance in an accounting role but this is my first position in the commercial and bridging sector and I have learned on the job and via in-house training with the team.

As a case manager, my role is to ensure our brokers and clients receive the best service possible, so that each individual case is completed within suitable time frames and to help manage their expectations. It is a busy and challenging role and it keeps my mind active and on your toes. No two cases are ever the same, which is one of the many reasons I enjoy my role, with the variety of cases and their requirements. There is no better feeling when you know the case has completed and you have been able to make a difference by helping people secure the financing they need.

What types of cases do you mostly handle and what are you seeing more of so far in 2023?

We specialise in commercial, commercial buy-to-let (BTL) regulated and unregulated bridging and development finance and I would say most of the time, our cases are split quite evenly, although we have recently had a slightly higher number of commercial BTL cases.

There are still landlords whether experienced or new to the sector looking to purchase and add to their portfolio particularly if they have equity in their existing stock while others are trying to refinance either because they are trying to reduce their rates or are coming off a fixed rate after two or five years.

If you could give one or two tips to brokers looking to submit cases, what would they be?

One key tip is to double check and thoroughly review everything before submitting an application to make sure there is no information missing. It can be very easy to overlook something and this can cause delays and be problematic, particularly in bridging cases when things need to move quickly.

Another is If a client is refinancing a recently purchased property, it is also always worth making sure land registry is updated with the new ownership, as we often encounter situations where this information has not been updated, which slows down the application and can increase costs.

Can I be cheeky and add a third, here at Clever Lending we always want to pass on our expertise … It is also helpful if a broker supplies us with an ideal completion date as this helps us manage client expectations, particularly if the broker is unfamiliar with the commercial market.

What common problems occur between issuing terms and completion and how do you work with lenders, valuers, solicitors, brokers and their clients to resolve these?

In cases where a person is purchasing a property using gifted funds as a deposit, one of the most common problems we encounter is making sure we have all the relevant information we need in terms of who is gifting the money and evidence related to where the funds came from.

Lenders are especially hot on anti-money laundering checks, so making sure all this information is readily available is important. Providing a good pack and a good level of communication throughout is also vital.

As an expert on complex cases, are you seeing more complexity generally and are there any common aspects you see more of now than say 12 months before?

We may occasionally encounter cases where we may need to go into pension schemes or SIPPs for refinancing purposes, but they are very few and far between. Most of the cases I come across are relatively straightforward in terms of purchases or refinances.

Some cases of underwriting have become a little bit more complex over the last few months, mainly due to the tightening of lender criteria and uncertainty in the market. Bank statements can also prove challenging as we need to be able to identify and explain where all funds come from before we submit the case to the underwriter, otherwise questions will be asked.

What benefits do brokers have when working with a business such as Clever Lending rather than them doing the case themselves?

We understand what lenders require when submitting an application and offer a full packaging facility that means cases are seen through from start to completion.

Our knowledge and experience of working in the specialist market means we are able to quickly and efficiently package a case and tap into a market that brokers often cannot access in terms of special rates and access to lenders. This can help brokers save time and means they don’t have to deal with solicitors, valuers, or estate agents, as we do all that for them.

Clever Lending Completes £1.9m MUFB Refinancing

Posted on | by Damien pepper

Clever Lending, the specialist finance packager and master broker, has announced that it has recently helped a customer who needed to refinance a Multi Unit Freehold Block (MUFB).

The client, a construction company, required the refinancing in order to consolidate its existing portfolio lending and intercompany loans. It also wanted to capital raise for onward investments to buy and renovate other properties.

With MUFBs, a single freehold property is usually split into individual flats or a row of houses under one title. In this case, there were 21 properties under a single title.

Using his knowledge and experience of MUFBs, Steve Sanderson, commercial and bridging specialist at Clever Lending, knew a lender that would immediately accept the case and placed it with them.

The refinancing was at 63% loan to value (LTV), with the £1.9 million loan provided against a £3 million valuation.

Steve Sanderson, commercial and bridging specialist at Clever Lending, commented:

“Many buy-to-let lenders only deal with vanilla cases, this is where the specialist lenders kick in, as this was a far from straightforward proposition. However, we have worked with this lender on many occasions and know they specialise in providing solutions for property investors with complex requirements.

“We worked closely with the lender and client to ensure a positive outcome, once again showcasing Clever Lending’s ability to get results for our broker partners.”

The lender, added:

“I’m thrilled to have collaborated with Steve at Clever Lending again, in what is another fantastic example of how we can work with highly experienced broker partners to support their clients with complex requirements.

“Our expertise in handling intricate buy-to-let cases, such as this Multi-Unit Freehold Block, allowed us to provide a tailored solution to allow the client to refinance not only their existing portfolio, but to raise capital for future investments.”