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Bridging

Hope Capital to provide bridging loans to people with adverse credit

6 Aug 2019

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by Gary Bailey

Hope Capital is to extend its lending to borrowers who have had bankruptcies, IVAs or who have an impaired credit history.

 

The bridging lender has taken the decision to enhance and extend its product range to meet the needs of applicants with an impaired credit history. It will require there to be a solid exit route to pay the loan back on or before the due date and each loan of this type will need to be repaid with the sale of the property lent against.

 

It is providing these loans to meet a need in the marketplace, although Hope Capital will want to explore the reasons for the bad credit happening in the first place and how it has been overcome. It will want to be sure the cycle of poor credit has been broken and will not continue into future borrowing.

 

As long as these assurances are received, Hope Capital will accept borrowers with CCJs, a settled bankruptcy, IVA or Company Voluntary Arrangement. It will also review applications from potential borrowers with outstanding or ‘rolling’ arrears.

 

For a residential purchase, rates will start from 0.69% per month. Hope Capital will lend up to a maximum of 75 % LTV, including to borrowers with under £5,000 of CCJs that have been settled at least 24 months ago. Other LTVs will vary according to severity of impaired credit and whether any CCJs and arrears are current or settled. For borrowers with outstanding mortgage arrears the maximum LTV will be 40%.

 

For a semi-commercial loans rates will start at 0.85% per month. A max LTV of 70% will be available for a borrower with no bankruptcies, IVAs or CVAs and with settled CCJs of less than £5,000, down to 40% for borrowers with rolling arrears.

 

For commercial property the maximum LTV is 65% with rates from 0.89%.

 

Hope Capital is well known for being a specialist bridging lender prepared to help customers with more unusual loan requests as well as those in need of standard bridging loans. With this enhanced range of loans, it will continue to accept less-regular cases. It will also accept unusual and complicated ownership structures as well as individuals, partnerships and companies.

 

There will be no credit scoring and each application will be looked at on its own merits with underwriting dependent on a clear and feasible exit strategy to pay the loan back by the due date. The loans will be available across England and Wales for light, moderate and heavy refurbishment as well as for property portfolios and for businesses.

 

“We have always looked at every application on its own merits and weighed up each loan individually.  Some of the applications we have received in the past have been from people who might have a somewhat tarnished credit history but who have a very strong business case and a clear exit route.  At low LTVs it makes perfect sense to grant a short-term loan when the case warrants it, with the condition that each loan is paid back with the sale of the property. This is particularly the case when someone has had credit problems in the past but these are now resolved, as long as we understand the reasons for this and we are confident this is not ongoing.

“We have introduced this extended range of bridging loans in order to make bridging available to a whole new segment of the market.”

Gary Bailey, Managing Director

Over the past few years, the start to the year has triggered something verging on a price war with bridging rates being slashed for a temporary period of time.  The same pattern was seen this year although to a slightly lesser extent. With some lenders having funding lines pulled at the end of last year and the beginning of this, there was a wariness with slightly more of a focus on profit margins.  No lender can afford to be in a loss-making situation and no broker or borrower should want them to be as it jeopardises everybody.

 

It brings home the priority that brokers and borrowers need to place deals based on surety of funds and the focus that lenders need to place on responsible due diligence. With that in mind, the themes for this year need to be:

Ensuring any lender that a broker places business with has a guaranteed source of funding.  This will ensure that your clients get the money they need when they need it and that it remains in place for the duration of their project. Principal lenders with their own funds are always going to be the safest bet.

 

Is the lender in a position to make their own decision? If you submit a case to a lender and they say ‘yes’ in principle, does yes really mean ‘yes’ or is it a decision that an external credit committee will be able to overturn? If, as a broker, you have submitted comprehensive, accurate information, your credibility and reputation with your client then rests on the lender doing what they say they will and lending when they say they will.  To a large extent this is linked to where a lender’s funds come from and how much autonomy to lend they really have.

 

While growing competition has meant that rates are ever-more competitive this will never be the ‘be all and end all’ in bridging. Surety of decision, surety of funds, flexibility over what they will lend upon and speed of turnaround are arguably more important than rate. Package this up with clear communication and transparency over terms and this should be the package that brokers are looking for in a lender this year.

 

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Gary Bailey

Gary is responsible for influencing and implementing the strategy of the business and embedding the company’s values. Managing the day-to-day operations of Hope Capital, promoting expansion and innovation to achieve its growth ambitions.

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