
Loan Amount:
£585,000
Property Value:
£900,000
LTV:
65%
Many of our loans are used for refinancing where property investors are coming to the end of an existing term, and they need to prepare for the next stage of their investment journey. Often, original refinancing plans can fall through or face complications, and we’d be there to offer a solution.
A borrower turned to us for refinancing capital to cover an existing facility which was due to redeem. They faced issues with a down valuation which added complexity to their circumstances. As such, they required flexibility and speed to progress.
Our underwriter got to work, taking additional steps to keep our deal as secure as possible.
Taking precautions
Prior to our deal, the borrower had to contend with a down valuation that led to a shortfall. They addressed this shortfall but in doing so, added complexity to their overall set up. This would make it harder to work with high-street lenders.
Fortunately, we were still able to work with the borrower’s circumstances, but we put contingencies in place to ensure both we and the borrower were protected, and on a more stable footing.
The exit strategy itself was made up of two elements – long-term refinance, and a property sale. To ensure both these elements would come together adequately, the underwriter poured over the details and paperwork involved, and made sure there were confirmed long-term refinance options available.
Realistic refinancing bridging loans
Down valuation issues may end up being especially prevalent where borrowers are remortgaging or refinancing[1]. This can create obvious headaches for property investors, but the specialist lending market is primed to deal with this kind of issue.
At Market Financial Solutions, our refinancing bridging loans can accommodate various market-related challenges. This may include down valuations, mainstream lender hesitation, or an unconfident buyer market.
FAQs
Do I need to refinance with the same lender?
No, a borrower does not need to refinance with their existing lender. For the most part, property investors will end up refinancing with an external lender. Should they choose to refinance with their existing lender, this is technically known as “product transferring”.
Does a Refinance Affect Credit Score?
Refinancing may affect one’s credit score, but only temporarily. As part of the refinancing process, a hard enquiry will be placed on the borrower’s credit report. This is done by a lender when they need to assess a borrower’s creditworthiness.
These enquiries may last for up to two years, but can also be cleared within a few months. Generally, the more hard enquiries one has on their record, the riskier they may be perceived as by lenders.
Why do properties get down valued?
In a nut shell, down valuations happen when a surveyor, instructed by a mortgage lender, says a house is worth less than the buyer has agreed to pay. This can be driven by a number of factors such as an unstable economy, housing market forces, or where problems are flagged during the valuation survey (e.g, Japanese Knotweed has been found).
Further reading:
- Featured Product: Refinance Bridging Loan
- Criteria: Brigding Loan Criteria
- Tool: Bridging Loan Calculator
- Guide: The Complete Guide to Refinancing a Property
- Blog: Why specialist lenders could help where high street banks can’t
- Blog: Loan affordability: why has it become an issue and what’s the solution?
[1] https://www.financialreporter.co.uk/blogs/why-valuations-can-go-down-as-house-prices-go-up.html