No-one wants to tell their client that finance simply can’t be secured, especially when the UK has a mortgage and loan market which is one of the most innovative in the world, and can usually cater for all kinds of niches.
Of course, since the Credit Crunch there are fewer options for certain types of borrowers, particularly in the adverse credit space, although once again it’s not out of the question to be able to secure a product which can meet the needs of those with a less than perfect credit history. Indeed, right across the board, some brokers are able to think out of the box and can develop solutions for clients where others might simply not have the experience, knowledge or expertise to even know that such an option might actually exist.
This is just as true for the commercial/investment market as it is for the residential which is why it’s incredibly important that brokers avail themselves of this knowledge or use a specialist who can find the necessary solution. Take, for instance, a recent case that came across our desk from an introducing broker who had tried a more traditional option; however when this didn’t work out they looked to us to see if we could provide that specialist touch.
With some cases and properties they simply look like they are completely unmortgageable and these can often be the most difficult to work through. This aforementioned case seemed to be of the unmortgageable variety – it came from a broker whose clients owned a property in Berkshire that after buying had been converted into two flats. Their mortgage on the property was about to come to an end and they were looking to refinance via a ‘traditional’ buy-to-let product.
The problem came when applying for a buy-to-let mortgage with a lender. Although the clients had split the property into two flats, they had failed to split the title and therefore lender(s) were not willing to approve the buy-to-let mortgage. To the broker this appeared to be a significant stumbling block, one that could be insurmountable however he realised there could be a solution beyond his knowledge and therefore introduced the case to us.
After looking carefully at the case, we realised that by utilising a bridging loan the broker’s clients could get to where they wanted to be which was ultimately refinancing via a buy-to-let mortgage. We arranged a bridging loan which meant the clients could redeem their current mortgage allowing them to then split the title upon completion of the bridge. Having done this, the introducing broker was able to arrange a buy-to-let mortgage to repay the bridge – the case would not be turned down by the buy-to-let lender because the title had been split.
Simply by utilising the bridging option we were able to take what seemed like an unmortgageable property very quickly into the realms of securing buy-to-let finance on it. Needless to say that both broker and client were extremely happy with the outcome plus the eventual costs of taking the bridge and then the buy-to-let mortgage were not overly expensive and were very much in keeping with the client’s expectations of what they would pay short-term for the loan, and what they would then pay for the buy-to-let.
It’s important to recognise that this isn’t rocket science, but for our part it was recognition of how a client would benefit from a bridging loan product – knowledge that the introducing broker didn’t have and was therefore happy to use our expertise in order to find a solution for the client. Plus of course the broker got paid his broker fee and kept his procuration fee on the deal(s), while we placed, packaged and completed the bridging loan. Essentially, it was a no-brainer for all concerned and hopefully gives you an idea of the alternative options that can be available for those cases which might appear to have hit the buffers.
