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If you’re looking to purchase a property at auction – perhaps to refurbish, or to acquire the land to build upon – then you may need finance to complete the transaction.
75%
1 Year
5%
Daily
25 Years
£250k
£100M+
OMV
In a post-Brexit world, it’s now becoming clear that the UK property market is one of the most desirable investment destinations in Europe, if not the world.
Whilst many other countries were struggling with the economic fallout from the Coronavirus pandemic, the UK property market was having something of a resurgence as prices and demand rose quickly throughout 2020, with some areas in England registering price rises of over 8% year-on-year.
Due to the stability of the UK economy and the fact that the UK has its own central bank that can set monetary policy and interest rates, it’s meant that not only UK residents, but also foreign nationals and overseas residents have expressed huge interested in investing in the market.
With government bonds returning some of the lowest yields in decades, many are now flocking to UK property for good returns in a safe and reliable market, which the UK has demonstrated it represents with gusto.
This, in turn, has driven a huge surge in demand for residential property mortgages, mortgages for non-UK residents, and buy-to-let mortgages more generally. It’s not hugely difficult for a British resident to get this type of mortgage, or a buy to let mortgage, but for foreign nationals it can prove difficult for a number of reasons, which is why we’ve put together a brief guide for these types of buy-to-let mortgages.
Looking for development finance? This type of short-term finance is used by property developers, builders, landlords, companies or individuals that need to fund 100% of the refurbishment or in the case of a ground up development the entire development costs. These loans are typically for experienced borrowers, however at Hank Zarihs Associates we have a wide panel of lenders that can offer development finance for first time developers. For example, development loans can be used:
You would not usually apply for a development finance loan on the high street with your usual bank, as this is a specialist product that tends to be offered by specific development finance lenders or intermediaries.
es they can get a mortgage in the UK, however, as with non-British nationals, it’s all about proving where the funds are coming from, where your income comes from, and proving to the lenders that you’re able to pay your mortgage whilst living abroad.We can help you to do this, of course, and we have helped to fund millions in the buy-to-let sector over the years with finance, a mortgage, or other types of loans.
Again, the best bet is to get some advice from one of our experts who can talk through your situation with you and discuss what you may need in order to get approved for a buy to let or residential mortgage.
In short, yes they can, however, most times a non-UK national will need to be able to provide a good level of proof of their income, their employment and the source of any funds that they intend to use to both buy a property, or pay a mortgage.That isn’t to say that’s it’s particularly difficult to do this in order to get a mortgage, however, it also makes good sense to seek advice when looking to apply for a residential mortgage or buy to let mortgages if you’re not a UK national.Our brokers specialise in just this type of mortgage, and buy to let mortgages more generally, so they’re in a good position to talk you through what paperwork you may need.
Ready to apply for financing for your property? We work with a tried and trusted panel of lenders who are actively lending. The deals that we can recommend to our clients are updated daily, so you have complete peace of mind that you are receiving details of the best finance products on the market in real-time.
Hank Zarihs Associates streamlines your financing journey with tailored solutions, fast approvals, and expert guidance, connecting you to trusted lenders for project success
Well with this type of non-UK mortgage, or for a buy to let, it will broadly depend on your circumstances, your deposit and your income and where that income comes from, and will also depend on the lender you approach.
With British lenders, you’ll need to meet their criteria first, which we can help you with, but broadly speaking you’ll be able to borrow anywhere between £3000 and £1 million depending on your circumstances.
For a non-UK resident, it will generally tend to be the case that banks are little more risk averse in these circumstances, but it’s worth speaking to an expert on this.
A residential mortgage is for a property that you or your immediate family intend to live in at least some of the time, whereas a buy to let mortgage is designed for investors who want to buy a property and then rent it out to somebody else and become a landlord.
For property investors, they tend to take out this type of landlord mortgage and they can either choose to repay only the interest, making the repayments cheaper, or they can pay the interest and the cost of the property too with their loan repayments.
There are a few different BTL mortgages that you can choose from, depending on your circumstances, and we’d recommend speaking to one of our brokers about your options with this, regardless of which country you’re resident in.
For landlords looking to gain a rental income, a BTL mortgage is often your best choice as these are specifically designed for this type of mortgage, and if you take out a property on a residential mortgage and later on decide to rent it out for rental income then you’ll often need to seek the permission of your mortgage lender anyway.
For an outside national, the process is only slightly different in that your income has to be declared if you’re looking to invest in a property, and the application process may be slightly longer in those circumstances.
If you’re resident in Guernsey then you’ll be making an application under the same process as a foreign applicant, however, it tends to be easier to get approval from British territories, and this is something you can discuss with a property advisor as they can explain that process to you.
Due to tax divergences with the mainland UK and Guernsey, it would also be advisable to discuss this with an accounting, and if you’re looking to buy a BTL property, then it may even make sense to set up a specialist company in the UK known as a special purpose vehicle, which are used for tax efficiency and can help you to manage a property portfolio more efficiently in the long run.
It’s a similar situation if you’re looking to buy a property or get mortgages as a British citizen in Guernsey, and so this again would probably be best discussed with an expert.
This is a similar situation to if you’re a Guernsey resident, and most banks and traditional lenders will expect a little more detail with your application, but Jersey residents shouldn’t expect the same criteria to buy a property as, say, a Brazilian resident, for example.
Most UK banks and finance companies have offices based in the Channel Islands and, as such, it’s fairly easy in most cases to get the paperwork required to get approval for a mortgage application for your property.
Again, as with other Channel Islands, it’s worth talking this through with your accountant before you seek to earn rental income from properties or flats or a house.
There is also the prospect, for Jersey residents, when looking for a loan for properties or flats, that they could also set up an ‘SPV’ special purpose vehicle to make their purchase more tax efficient, and this is something worth discussing with an accountant or tax advisor, as well as one of our brokers.
We’ve got a team of specialist and dedicated advisors who can talk you through all the requirements for this type of application and walk you through all the paperwork that might be required.
Purchasing properties in the UK can be one of the most lucrative investments in the world if done in the right way, but things can often be confusing, especially when you’re looking for finance or loans and you’re not a British national or living in the country.
It needn’t be complicated, however, and that’s why we’ve got a team of highly knowledgeable and friendly experts who can help you out from start to finish and give you the confidence and reassurance that you’re looking for.
We’ve spent years in the industry and so that’s allowed us to build up a huge knowledge base and a panel of lenders that stretch right across the mortgage market, so you can be confident that we’ll be able to offer you a range of quotes from right across the spectrum, rather than having to approach these lenders and banks individually where they may ask for different details and delay the process of getting the right funding.
Because we’ve spent so much time cultivating these relationships it means that we’re able to offer some of the best rates around and in many cases we can offer exclusive deals and rates for our clients, with our panel knowing that we only put forward quality applications that have a good chance of acceptance.
Our panel have the confident in us because they know that we take the time with our clients, offering market leading advice and guidance throughout the process helping you to put together your application as quickly as possible.
We also appreciate that our clients need funds and finance arranging in the quickest possible time, which is why in many cases we can get you an agreement in principle in a matter of days.
To ensure you’re getting the best possible deal with the least amount of fuss make sure you speak to one of our specialist advisors today so that they can talk you through things and understand your situation.
You may have heard about bridging loans in the context of property investment or moving house, but what exactly are they? Basically, bridging finance is a type of short-term loan that allows a buyer to purchase a property before their existing home or investment property is sold. As the name suggests, it ‘bridges’ the funding gap in the lag between purchase and sale – offering rapid access to the necessary purchase funds for a brief period of time.
Borrowers can access from £5,000 to £250 million, depending on applicant status, the value of the property and other lender criteria. Higher lending amounts are typically reserved for borrowers who can put up several properties as security. Quotes are provided on a Loan to Value (LTV) of 65%-80% in most situations.
The bridging finance market has grown rapidly, with a number of small and focused lenders now on the market, catering for specialist property finance needs. The market has changed because large high-street lenders have become less willing (and sometimes less able) to lend ever since the financial crisis of 2008.
As to whether a bridging loan for property development, auction purchase or private home buying is a good idea, it depends on a variety of factors. Bridging loan requirements vary by lender, but each will have certain common features that need to be considered.
The most notable feature of this type of finance is that the interest rate is likely to be high. At the same time, there are typically high administration fees applied to the loan. Because of this, it is essential to proceed very carefully and with a full view of the facts. Borrowers have been burned by this type of loan in the past, in instances where transactions have fallen through, or where lenders have turned out to be unscrupulous and untrustworthy.
Benefits of instant bridging loans
1. Rapid access to money
2. Ability to borrow large sums – often up to £250 million depending on applicant status
3. Options for flexible borrowing.
Possible downsides of bridging loans:
1. Failure to understand the unique features of these loans can result in financial risk
2. Bridging finance is secured against your property; meaning it can be sold if you can’t meet the repayment terms
3. A costly option with fees and higher interest
Bridging finance interest rates will vary by lender. However, interest costs of 1.5% a month are not unusual, which can equate to an annual percentage rate of 18%.
Bridging loans may have fixed or variable interest rate features. Fixed interest rates are ideal for customers who want stability, as they offer the same amount of interest for the duration of the term. The rate is pre-agreed, but there may be a premium for this security.
The other choice is to have a variable rate bridging loan which can change with the base rate. However, you can save money if the base rate decreases. Borrowers who are less concerned about security sometimes prefer the variable rate option if they believe that the financial markets will travel in their favour. Knowledge and market insight is required here, along with a thorough understanding of personal risk tolerance. If interest rates appear to be rising, most customers will choose the fixed interest rate to lock it in and avoid further increases in the event of a base rate rise.
Bridging loan periods tend to be for several months and there are usually different options for paying the interest portion.
Monthly repayments
The customer repays the interest every month as a separate payment, rather than adding it to the outstanding balance
Rolled-up bridging finance deals
The compound interest is calculated monthly but added to the outstanding loan balance and paid together when repayment is due.
Retained interest
The monthly interest payment due is covered up to a predefined date so that the full sum is only repaid when monies are due.
As well as interest payments, there will be an arrangement fee for the set-up of the bridging loan, which is usually around 1-2%. A repayment fee for exit paperwork may also apply, along with valuation fees for the cost of the surveyor.
Remember, this type of finance is designed to be short-term. As soon as it extends beyond the agreed interim or bridging period, penalties can rapidly stack up. Typically, bridging finance is available for 1 – 18 months.
Yes, there are two broad types: closed bridging finance and open bridging finance.
With closed bridging finance you will tell the lender how you will repay the loan – with what funds and when. These loans usually complete within a few months and the clear exit plan is required as a lending condition.
Open bridge finance won’t usually need this type of exit plan, and it is typically the loan of choice when funds are needed urgently to complete a property transaction. No detailed plan is needed to explain how the debt will be settled, and the finance tends to be offered for up to a year. Of course, it’s important to note that interest will keep being applied throughout this period.
There are also first charge bridging loans and second charge bridging loans.
If you have a loan against a property which is already mortgaged, you’d take out a second charge loan. An example of this would be if you were planning to finance a property extension to improve the property. The categorisation tells the lenders who will have legal priority for repayment if the loan was unable to be paid off at the term-end.
First charge loans apply if the new loan is the first secured on the property.
Bridging loan requirements will depend on the lender. Often, lenders will require that:
Customers must also take out their property mortgage with them too, providing the bridge finance as an interim measure before the standard mortgage comes into play.
Property is put forward as security against the loan. Some lenders expect applicants to have more than one property in order to be eligible for their bridging finance products, but this will depend on the lender and the size of the loan.
Applicants show proof of income – although, interestingly, as loan interest isn’t repaid monthly, some lenders do not request this.
The applicant shows evidence of their property investment track record if they are planning to develop their purchased property.
The applicant can show a business plan if they are using the bridging loan for commercial purposes.
Development loans are another type of short-term property development loan. They are repaid in stages and calculated on the gross value of the development. Personal loans are another option, as are remortgages when timescales are more flexible and a long-term loan is desirable.
Use a bridge loan calculator
Ask for your lender to provide a tailored bridge finance example or illustration around your particular borrowing needs.
Think carefully about the type of bridging loan that you need – whether open bridge finance or closed bridge finance.
Know whether the loan is a first or second charge type.
Clarify whether the interest rate is fixed or variable.
Review products from several lenders.
Be clear on your security.
Read the small print!
Bridging loans are offered by banks, building societies, specialist lenders and brokers. They aren’t widely advertised and usually require a direct application by the customer to find out the product features and offers.
Once you have made an application, a decision will usually be made within 24 hours. The funds then will take around two weeks to be issued, including time for checks to be carried out, the valuation and the actual transfer.
Hank Zarihs are highly experienced and specialist financial intermediaries operating in the property development market. We work with a tried and tested panel of over 60 trusted lenders and can provide excellent bridging finance with attractive features. Contact us to find out more.
Hank Zarihs Associates streamlines your financing journey with tailored solutions, fast approvals, and expert guidance, connecting you to trusted lenders for project success
