5 From 5… Property Finance

Property Finance covers a wide array of different financial products including Commercial Mortgages, BLT Mortgages, Bridging Loans plus Development & Refurbishment Funding which can be used to buy property, build property, invest in property and refurb property or even just provide some additional working capital!

With Property Finance you need a property or land to secure the loan against and the amount that can be financed is usually a percentage of the LTV (Loan to Value). With some forms of Property Finance you can roll up the interest or have interest only payment options, but there are so many different types of property finance that repayment options can often be tailored to an individual scenario.

Here are five things you may not know about Property Finance:

1. Some lenders will fund 100% of the build works value with Development Finance – This is true, but the devil is in the detail… depending on your experience there are lenders that will support you potentially by financing the whole project but the more experience you have and the more you can invest into the project the better your rates are likely to be and hence the better your return could be.

2.? Bridging Finance arrangements don’t require a monthly payment – That’s correct, instead the interest is rolled up and compounded and then repaid by way of your exit strategy. So, if you are looking to avoid monthly payments, then this helps.

3. Bridging Finance doesn’t just have to be used for property - In fact, you can raise money against an existing property for other purposes, providing there is a clear exit strategy to evidence the mortgage and interest can be repaid.

4.? With buy-to-let, it’s all about the strength of the investment - affordability is assessed with lenders calculating this based on rental potential (rental yield). The projected rental income must cover the mortgage payments, calculated at current and possible future interest rates. Most lenders require it to be between 125% and 145% of your mortgage repayments. A local letting agent will be able to share an estimate for the property you have in mind.

5.?I can offset interest on a Commercial Mortgage against tax - Happily, you can offset the interest on your commercial mortgage against tax – something you can’t usually do as a homeowner. For our clients, that often helps to make things much more affordable.

Whether you’re looking for investment for a property development project, want to renovate a buy-to-let or even invest in a commercial office building, finding the right type of property finance from the wide range of options available in the market and which option may be right for your business’s needs can be a long and complex process with so many lenders and variables on rates and LTV’s just to name a couple. But getting the right type of finance in place is crucial to the success of the property project you’re undertaking, whether that’s buying your company’s premises, or growing your rental portfolio.

We are a team of highly experienced former banking professionals helping our clients’ businesses looking to raise finance while navigating, what can be, a complex banking and finance market. We're here to help and we're enthusiastic about the prospect of working with you to breathe new life into your funding.