Funding investment properties in 2011 - 22.03.2011

Author: David Whittaker Posted on: 22 March 2011

The number of calls for refinancing existing bank loans prompted by the bank and not the borrower seem to increase every day. Here is a flavour of the issues borrowers are encountering when “the bank manager” calls":

• Your facility review is next month; we will not be renewing and would like you to
   refinance away within the next quarter
• We will renew your facility but must now switch you onto capital and interest
   over 12 or 15 years at Base plus 3% - and then
• Our credit team will stress your rents at a notional rate of 7.5% over 15 years
   assuming 35% voids.

All these reflect the need of banks to re-circulate capital that was leant too cheaply in the good times and still continue to re-shape their balance sheets to provide for future increased capital adequacy provisions.

So what can we do to help in these situations?

• Terms up to 20 years
• Lending to 70% LTV on variable and fixed rates
• Interest only on residential investment up to 10 years
   – includes multi-unit freeholds, HMOs and lending to limited companies
• Various interest-only terms on mixed commercial and residential investments
• Funding on LIBOR and BBR
• Stress test at 90% of passing rent at 130% at 7% and 7.5%
   on interest only – achieves higher leverage.
• Limited personal guarantees on Ltd Co where appropriate

These terms will often accommodate deals generating 4.75% to 65% or higher if stronger cashflows.

All we need to give you a quick response is a schedule of rents and lease terms (if including commercial), description of property ands its condition, location and how it is owned – appetite for offshore funding is unsurprisingly somewhat more subdued at the moment.

Call us now for more information on 0845 345 6788.