ADVANTAGE ONLINE | JULY 2024 9 matter of time before we see the Bank of England drop the base rate , which could help to provide some much-needed stimulation to the market .
Current concerns
Despite this , we need to be practical and address the concerns some borrowers continue to face when trying to secure the finances they need to fund new projects and stimulate growth . A key stumbling block for business owners in particular is the inability to easily unlock equity . With some high street lenders tightening their loan criteria , borrowers are finding it harder to obtain an unsecured business loan . The application process is also becoming lengthier and more expensive .
Elsewhere , landlords and investors who are in need of long-term solutions are also facing challenges when it comes to securing the loan-to-value they need to unlock equity . With larger LTVs allowing borrowers to release more money when they are refinancing , this can provide more funds to reinvest in their portfolio , whether it ’ s purchasing a new property or renovating or developing an existing asset . However , many high street lenders tend to cap their maximum LTV between 70 % and 75 %, stymying what equity borrowers have at their disposal .
Specialist solutions
As we wait to see what the future holds politically , it ’ s vital that specialist lenders step into the void left by our high street counterparts over the past few years . What sets specialist lenders apart – including the ability to move quickly and think outside of the box – should be highlighted to borrowers who are seeking urgent and often complex financial solutions , particularly when it comes to leveraging equity . If your client is looking to secure a buy-to-let mortgage with a maximum LTV then the issue of
affordability will certainly come into play . With ICR stress testing ranging from 125 % to as high as 170 %, a lower threshold can mean that a borrower can refinance onto a product which allows them to draw more money out of their existing asset . This is of particular benefit to portfolio or professional landlords who are working on multiple projects .
Meanwhile , for those who only need a short-term fix , a second charge bridging loan could be best suited to them . With funds delivered quickly , a second charge has the added benefit of not disrupting an existing mortgage – which is a huge bonus if your client has a favourable rate . Second charges can be a powerful tool , especially for business owners , but I am surprised at how underutilised they can be . I would suggest this could be due to a lack of awareness around second charges . We have been trying to rectify this by highlighting to our intermediary partners how versatile they are , especially for those who have had difficulties obtaining a business loan from a high street bank .
A focus on certainty
Regardless of what policies Labour puts into place , MT Finance is here to support you and your clients via our buy-to-let mortgages and regulated and unregulated bridging loans . We believe that by providing greater flexibility can help to alleviate any concerns your clients may have .
Contact our team to find out more .