Loan Amount:
£700,000
Property Value:
£2,600,000
LTV:
27%
We’re proud of how robust our underwriting practices are – but sometimes, that attention to detail can unearth challenges that must take precedence. We had to help a borrower who needed to refinance with a specialist loan to cover an existing facility.
However, their personal circumstances were especially complicated, requiring a high level of due diligence and paperwork. Also, during the legal stage, we uncovered arrears which could have limited the borrower’s long-term options.
To make sure this investment didn’t lose any of its potential, our underwriter worked quickly to find a way forward.
Internal Refinancing
Initially, we focused on the potential issues unearthed in the legal stage. Seeing that the arrears could have hit the borrower’s credit record, the underwriter took steps to ensure it would be covered within our funding parameters. We set aside surplus funds within our loan which would solely be used to even out the borrower’s finances.
With the main risks addressed, we focused on the borrower’s exit strategy options. They planned to move onto a BTL mortgage down the line and while it wasn’t a deal breaker, the underlying property did not yet have tenants. This may have limited their options on the high street.
Fortunately, the underwriter determined that the borrower could refinance onto a Market Financial Solutions mortgage if needed, expanding their options greatly. With multiple routes forward, we delivered the bridging finance required.
Rising Demand for Optionality
Refinancing is set to come to the forefront this year. According to analysis from Bayes Business School[1], around £71bn worth of outstanding commercial loans will need to be refinanced by mid-2025.
What’s more, the ONS expects the UK mortgage market to be worth £216bn this year[2]. Around £58bn of this will be dedicated to remortgaging, accounting for just over a quarter (26.9%) of the gross market value.
Many borrowers will likely find themselves needing to refinance in a much more intense market this year. We can do what we can to help with this by providing optionality across our refinancing product range.
