Blog Archives

How bridging finance might get you out of a tight spot

29.01.2012

The bridging sector has expanded rapidly over the past couple of years, with many more lenders offering such finance. This has led sceptics to surmise that there must be saturation in the marketplace because there can only be finite demand.

And yet we continue to see examples where traditional lenders are failing clients, leaving them dependent upon bridging finance. Only this week, a client was referred to me because he was struggling to raise £200,000 from his bank to put towards a deposit on a £2m property. It was not because of lack of income – he is a millionaire with a very healthy income and a significant property and investment portfolio. No, the problem was an administrative mix-up with a credit card which meant his normally impeccable credit rating was compromised. His bank refused to lend him the money required, leaving him with just a week before contracts were due to be exchanged.

Bridging finance provided a solution where the traditional lender failed. The client is a good risk but his bank refused to consider his usually impeccable track record of paying bills on time and in full because of this recent blot on his copybook. It was the wrong decision.

Bridging isn’t suitable for everyone but it can be a solution for those in a tight spot. Speak to an independent broker such as Anderson Harris for advice and to find the right deal for your circumstances.

Jonathan Harris
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Jonathan Harris

Fancy a bargain in the January sales? Just be wary about the mortgage deals

03.01.2012

January is traditionally the time of year for hitting the sales. But while the high street may be a place to find a bargain if you are looking for a new sofa, be wary of lenders offering sales on their mortgage products.

Take the lender offering a range of fee-free mortgages during January. These may be welcomed by borrowers who are trying to save on set-up costs but will it turn out to be false economy? Rates start at a competitive 2.39 per cent on a base-rate tracker but you will need a 40 per cent deposit and the maximum loan size is £500,000. Those who don’t fit these criteria will inevitably end up paying more or indeed simply fail to make the grade and be rejected, which could have a detrimental impact on your credit rating.

Many people will use this time of year to undertake a general review of their finances, which is a good habit to get into. While interest rates have been held at 0.5 per cent for what seems like forever, this won’t necessarily always be the case. There are other factors which affect the pricing of mortgage rates so it’s important to plan ahead. The eurozone crisis could have a huge impact on the wholesale money markets, which dictate the cost of borrowing. Indeed, a number of lenders have already raised rates over the past few weeks and others are likely to follow suit.

What is crucial is that you compare any mortgage deal with what else is available, particularly if you have complicated income streams, require interest-only, or need to move particularly quickly. It is important to seek independent advice from a specialist broker. A high-street lender offering mortgages in their January sales won’t necessarily be the best place to start.

Adrian Anderson
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Adrian Anderson