INSIDE RESIDENTIAL BRIDGING LOAN ( RBL )

Transcription

1 INSIDE N O I T A M INFOR RESIDENTIAL BRIDGING LOAN ( RBL ) Guidance Notes for brokers for Standard Bridging Loan proposals and others which may be considered on merit as Specials

2 Alternative Bridging Corporation Limited undertake larger and sometimes more complicated residential bridging loans and has the capability to understand and progress some of the more complicated proposals and to structure these loans to suit the borrower. However, where there is complexity, the negotiation is often more demanding and takes a little longer to finalise but in this instance, the end does justify the means. We hope this Guidance Note will provide you with a better understanding of the product, our preferences and what information we need to get the job done efficiently. 1. Our Standard Criteria: a. We finance: First and Second Mortgages New and second hand flats, houses and bungalows New-build, refurbishment and conversion Owner-occupiers Investors Regulated and non-regulated residential loans (see Guidance Note 5) b. Our Minimum Loan Size is 150,000 and our maximum is 5M with a sweet spot between 1M and 3M c. The Maximum Period is 24 months d. The Loan to Value ( LTV ) for properties valued up to: 1,000,000 75% 2,000,000 70% 10,000,000 65% e. Loans over 5M are Specials - see Guidance Note 6 f. We lend in: England, Wales and Scotland Our BDMs are based in: London and Home Counties Birmingham and the Midlands Manchester and North West Bristol, Cardiff and South West

3 2. What makes us smile: Borrowers with a clean credit history (see Guidance Note 7) Loans over 0.5M but under 3.0M Urban areas and well-located, popular villages with strong demand Homes valued between 300,000 and 600,000 ( 1,000,000 in London) A defined exit strategy, e.g. sale with agent instructed or refinance actively being negotiated 3. When we think twice: Remote and distant locations e.g. Scotland and rural Wales Listed buildings in need of heavy refurbishment Homes valued more than 2M. Over this figure, the LTV will be reduced to 65% Loans under 250,000 Properties which are part of a large project where the development is not fully sold High rise ex-local authority flats (over four floors) Doubtful exit strategy Borrowers subject to PEP (Politically Exposed Persons) sanctions or who are resident abroad particularly those in high risk jurisdictions that intend to use funds originating in those jurisdictions to fully or part finance the transaction either at inception or at takeout 4. What we charge - Fees and Interest: a. Interest Rates are from 0.65% per month and are influenced by LTV, the size and period of the loan and the Procuration Fee ( PF ) to be paid to the broker b. Arrangement Fees and Procuration Fees ( PF ) i. Arrangement Fee 1%: no PF paid to broker ii. Arrangement Fee 2%: PF to broker 1% PF to broker 1.5% - 2% - refer to BDM for interest rate brokers only

4 5. Regulated Loans: a. A loan is subject to FCA Regulation and separate underwriting if it is: i. A first or second mortgage on a private dwelling occupied by the borrower or any family member ii. A single BTL property owned by an individual which used to be occupied by that individual or any family member (Please note, we do not do CBTL regulated) b. Our Minimum Regulated Loan Size is 150,000 and our maximum is 5M with a sweet spot between 1M and 3M c. Standard HOTs do not apply for regulated loans but are prepared by ABC Underwriting specifically for each proposal and comply with FCA regulations d. Arrangement Fees are collected in full at completion e. Introducing brokers must have broking permissions for loans to an individual secured on an investment property (not BTL) f. For Regulated Loans a minimum loan period and interest retention of 12 months applies 6. Specials Loans ( Specials ) a. Specials are proposals outside of Standard Criteria and will be considered individually on merit. We will try to meet the requirement but may need more information b. It should be noted that Specials over 5M will be subject to individual underwriting and are expected to tick all the boxes c. Sighting by Credit Committee is mandatory for all Specials d. If guidelines are to be broken, please identify and detail the justification for a Special, e.g. strong exit strategy such as a contracted sale, borrowers who have meaningful other assets and significant income e. Loans of less than 250,000 need to be simple and straightforward and are for borrowers with a clean credit history

5 7. Credit History a. Clean Credit History assumes: No Unsatisfied County Court Judgements. No Defaults or late mortgage payments Never disqualified from being a director of a limited company No history of bankruptcy or IVA/ CVA b. Adverse Credit History: Where the assumption above is incorrect, please sight the proposal with full details and explanation 8. Valuation: a. ABC Underwriting will instruct each valuation b. We reserve the right to decline a previously instructed valuation unless it has been carried out by a firm on our panel or one we are prepared to add to that list. In all cases, we will reinstruct using our valuation instruction form c. We expect our valuers to be RICS members with at least four partners with an active, local sales agency near to the property d. For fees in respect of homes valued less than 1,000,000 valuation quotes will be obtained upon request e. For homes valued more than 1M, we will usually only instruct one of the national firms such as Savills, Strutt & Parker, Cluttons, KF, CBRE and JLL. Fees will be quoted on request 9. Solicitors Legal Due Diligence: a. ABC Underwriting will instruct one of our panel solicitors to investigate title and prepare the Loan Agreement, Legal Charge, etc. We currently favour: DWFM Beckman (regulated loans) Joelson Teacher Stern b. We will not agree to instruct the borrower s solicitor or one recommended by the introducer under any circumstances brokers only

6 c. We will not lend unless the borrower is advised by a firm of solicitors regulated by the Law Society, with a minimum of three partners d. For a guide to legal fees in respect of loans less than 1,000,000 refer to the ABC Legal Fee Scale Guide e. The borrower s solicitor will be asked to give an undertaking for legal fees. Delay in providing funds to the borrower s solicitor will delay the undertaking being given and commencement of the legal process 10. Further Advance ( Top-up ) a. We will consider a further advance (within criteria) following completion of refurbishment or improvement of the property. b. Top-ups cannot be provided for Regulated Loans 11. Homeowner s Construction Warranty: a. For new homes, and those less than 10 years old, we require there to be a homeowner s construction warranty e.g. NHBC, BLP, Evolution. b. In certain instances, e.g. large one-off houses, an architect s certificate may be accepted 12. Partly completed properties: a. Will always be treated as a Special b. Must be sighted and carefully reviewed and before commitment 13. Interest Retention: a. Unless proof of income can be provided demonstrating an ability to service interest monthly throughout the loan period, a retention will be made equal to the interest payable for the loan period. b. In the event of early repayment, the surplus will be refunded c. The advance including interest retention must be within LTV criteria d. For Regulated Loans a minimum loan period and interest retention of 12 months is required

7 14. Gathering Information: Most delay mostly occurs due to inadequate or incorrect information. Please help us to avoid this by providing at outset: a. Fully completed Residential Regulated Loan Application Form (available to download) b. Accepted Heads of Terms prior to our solicitor or valuer being instructed c. Where there is no interest retention, proof of income is required for past three years, e.g. P.60 s, Tax Returns or Audited Accounts (self-employed) brokers only

8 INSIDE N O I T A M INFOR ALTERNATIVE BRIDGING 2 Imperial Place Maxwell Road Borehamwood Hertfordshire WD6 1JN