Finding a Refinancing Solution for a Borrower with Missed Payments on Their Record

Loan Amount:
£7,426,000

Property Value:
£10,600,000

LTV:
70%

Borrowers of all backgrounds are still affected by the pandemic and its fallout. Many new investors and seasoned buyers across the UK are likely trying to get back to normality, nearly four years after the fact.

Once such client turned to us for support recently. They were seeking refinance to clear existing long-term finance from another project. Unfortunately, due to issues during covid, the borrower fell behind on their repayments which had created some adverse credit. This borrower had some bad luck, but our underwriter knew there would be a way forward.

Focusing on what’s happening now, rather than what came before

Our underwriter, from the outset, noted that while the borrower had some issues with tenants in the past, the current tenants were bringing in consistent rental income. What’s more, most had long-term leases in place.

Meanwhile, we noted the borrower planned to exit our loan by selling another asset. To make sure a sale was likely, our underwriter burrowed down into the details. We found that a 12 -month bridging loan would work well for the borrower, as it would allow them to get their ducks in a row and not be penalised with any heavy ERCs if we went with a long-term lender when the sale was ready to go through.

A 12-month bridging term allows borrowers to amend any adverse credit issues in their background and once they have demonstrated clean credit for 12 months, they may be able to exit more easily with a long-term lender.

Elsewhere, we found that the borrower had several substantial options on the table already, which we had gathered evidence for. With these assurances and thought out plans in place, we were able to find a solution for the borrower’s difficult circumstances, and provide funding.

Realism and optimism in lending

Property investors faced a difficult year in 2023, largely as a result of the UK still playing catch up with the lockdown years, and the fallout of the mini-budget. But, even with everything thrown at borrowers in recent years, we still believe there’s plenty of opportunity out there.

We have never shied away from lending in nearly 18 years of operating. In the face of economic downturns, recessions, and even a global pandemic – we’ve been there for brokers and their clients.

Regardless of what challenges may emerge in 2024, we’ll continue to be there for property investors.

FAQs

Will I be able to get a large loan with credit issues?

Yes, you absolutely can. We regularly support clients who have had past credit issues, including missed mortgage payments or CCJs, as long as they’ve taken steps to resolve them and now exhibit stable financial behaviour. We can help borrowers with a CCJ or missed payments with a bridging loan that could not only clear existing debt but also support a new investment. We focus on the quality of your current situation and future strategy rather than being bound by historic issues.

How did the pandemic affect investors’ credit history?

During the pandemic, many landlords and property investors experienced payment disruptions due to lockdowns and income volatility. That led to a surge in short-term arrears and temporary credit blemishes. We work with borrowers whose histories were negatively affected by COVID, something we understand contextually. In recognition of that, we evolved our approach to consider if payment issues were isolated and resolved, rather than disqualifying clients for a single past event.

What property types can I get a large loan for?

We can issue large funding against a wide range of properties including semi-commercial properties, HMOs, single-family residences, investment portfolios, and commercial assets. We previously were able to help a client who had missed payments refinancing a mixed-use buy-to-let and supported an exit into new investment funding. The key is that the asset has a viable exit plan, whether it’s a sale, or refinance into longer-term funding.

Do you have early payment charges on your products?

Our products are designed with flexibility in mind. For our buy-to-let mortgages, there are no early repayment charges once you move onto the revert rate period, giving you the freedom to repay without penalties after the fixed term. For bridging loans, many of our facilities allow repayment after an initial three-month period with no ERCs beyond that. Even on our Fusion loans, we offer a 25% ERC-free allowance after six months, and the charges reduce over time. This structure gives you room to exit early if your plans change, while still benefiting from competitive fixed or tracker rates.