Funding for an Overseas Investor Seeking a Mixed-Use Opportunity

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Overseas property investors can face an all-too-familiar pattern when trying to expand in the UK market: the deal makes sense, the numbers stack up, but a mainstream lender can’t move beyond their rigid criteria.

We see this often at Market Financial Solutions. Thankfully though, our flexibility extends to overseas borrowers. Say we’re approached by a British expat who has lived and worked overseas for the last decade, in a non-sanctioned country. This person has built a property portfolio where they’re based, and wants to expand in the UK.

They identify a mixed-use building in an up-and-coming location, which is in a dated condition. But its price reflected the work required, and the borrower’s plan was to refurbish, let the residential flats, secure a commercial tenant, then refinance onto a longer-term facility. But, there is a tight deadline involved, reflecting the property’s low price.

Why Mainstream Lenders Would Fall Short

Turning to mainstream lenders didn’t yield great results for the borrower. Despite strong overseas income, a substantial deposit, and a clear exit strategy, their enquiries stalled almost immediately. With no recent UK footprint, the borrower’s case was automatically filtered out by the mainstream lending market’s rigid tick-box lending criteria.

How a Specialist Lender Can Make the Deal Work

Fortunately, our underwriters would focus on this case’s clear credentials: the borrower’s property investment experience, a realistic refurbishment schedule, and the sound refinance exit strategy. We can work with overseas IDs and source-of-funds checks and once these are addressed, we would move quickly onto the valuation and legal work. These can run in parallel with each other in this case as there would be a tight deadline involved, allowing the borrower to move quickly to secure the opportunity before it’s too late.

We’d work with the borrower (and broker) involved to ensure the funds allowed for both the acquisition, and refurbishment work. With this covered, they’d be able to focus on their refinancing exit strategy with a now more accommodating long-term lender. Or, should it work better for the borrower’s circumstances, they could even remortgage with one of our bespoke BTL mortgages.

FAQs

What countries does Market Financial Solutions work with?

We are able to support borrowers from any country other than those that are blacklisted or sanctioned. What’s more, we are able to work with expats foreign nationals, and offshore trusts. These kinds of investors and set ups may be subject to enhanced due diligence, but our underwriters will keep them updated throughout the lifecycle of the deal. Mainstream lenders may struggle to support overseas buyers.

What is a mixed-use property?

A mixed-use or semi-commercial property is one that has both residential and commercial elements in the same space. A common example is a pub with a flat above it. These properties can present benefits for investors such as tax perks and multiple income streams. Although, they can be more challenging to invest in and manage. Regardless of property type, all our deals will be underwritten from day one of an enquiry and where everything lines up, we can have funding delivered in mere days.

Why would tick box lending criteria not work?

Mainstream and regulated lenders often must adhere to strict tick box lending criteria. This is a rigid predetermined set of eligibility factors and if borrowers do not tick the right boxes, they’re usually automatically rejected. While the specific criteria involved will vary between lenders, it usually involves credit history, age and residency requirements, employment status details and more.

Why do I need an exit strategy?

An exit strategy is the plan put in place by borrowers to repay their loan and in specialist finance, it is a crucial element of any deal. At Market Financial Solutions, we will not issue funding without one, and this is the case for both our residential and commercial loans. Common examples include refinancing with a long-term lender, or selling an asset to cover the loan. We’re open to a broad range of exit strategies, so long as they’re evidenced.