A Bridge Fusion Solution for a Property Investor With a Complicated Background

Loan Amount:
£1,250,000

Property Value:
£1,800,000

LTV:
70%

A property investor looking to make a relatively straightforward purchase of a residential asset, turned to us for funding. But while the investment itself was clear-cut, it was the borrower’s background which presented the potential difficulties.

The borrower a first-time buyer, and a first-time landlord. This would become a difficult, almost impossible criteria for many lenders.

To accommodate the complexity of this deal, our underwriter utilised our new Bridge Fusion product for the borrower. Early on during the assessments, it became clear that a standard bridging or BTL loan wouldn’t fit with the borrower’s circumstances.

Offering Time and Breathing Space

The borrower’s underlying complicated situation meant they’d need a longer term to purchase efficiently, get tenants in place, and then exit onto long-term finance. Our Bridge Fusion product would allow for this, while also presenting the option of extending for a further 12 months at the end of the term should more breathing space be needed.

Once it was confirmed that a Bridge Fusion loan would work best for this borrower, we turned our attention to their background. Their situation could have made it difficult to move onto long-term finance for the exit strategy.

To address this, we worked with the solicitors involved during the legal stage to attain relevant documentation. We also raised the fact that this was the borrower’s first property investment internally to the senior teams.

Working together, we all collectively determined that the potential risks of this deal could be managed within our criteria, and we got funding issued.

Understanding Our Borrower’s Circumstances Is Crucial

The financial landscape is complicated, and it’s becoming increasingly so. It’s why the FCA has focused so heavily on the consumer duty and other incentives in recent years. Lenders and other financial companies need to ensure they play their part in keeping the financial scene as steady as possible.

At Market Financial Solutions, this extends beyond simply following “know your customer” rules. We go out of our way to understand every facet of our borrower’s circumstances from day one of an enquiry. Doing so allows us to take on trickier deals with more confidence and efficiency.

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FAQs

Why is it generally harder for first time-buyers to receive finance?

In the residential market, it can be difficult to attain a high-street loan for a property due to the high prices involved. As house prices rise, higher deposits are required, which are hard to save for. Also, many lenders will view first-time buyers as high risk, given their lack of experience and credit history. As a result, first-time buyers are likely to face increased scrutiny, and more stringent affordability tests.

What kind of personal circumstances can make it more difficult to attain finance?

Many things can raise red flags when a lender assesses a potential borrower. This can include being a first-time buyer. Being a foreign national, having CCJs in one’s background, and/or income instability can make lenders hesitant.

Is a 12-month extension guaranteed with a Bridge Fusion loan?

No, currently the 12-month extension available with a Bridge Fusion loan is discretionary. The underwriter involved with the case will work closely with the broker to determine if an extension is needed, and if we can accommodate it within our parameters.