Why Good Property Cases Get Stuck, and How Specialist Lending Could Solve It
Written by Umar Riaz
Umar Riaz, Business Development Associate at LendInvest, on the questions that kept coming up at the Financial Reporter’s Mortgage Adviser Expo in Manchester and what they say about where cases are getting stuck.
Recently, I spent the day on the LendInvest stand at MAE Manchester, and while I wasn’t able to make it to a single seminar, I came away with real-world insights from the conversations I had with brokers.
After a full day of these chats, a pattern emerged that’s worth sharing with the brokers who couldn’t be there.
Nearly every conversation came back to the same underlying problem. The client is sound, the property works, the rental income stacks, but something about the structure or the timing means a term product doesn’t fit on day one.
Funding Share Purchase Acquisitions with Bridging Finance
This came up more than anything else. A client wants to acquire a property by buying the shares in a company that already holds property and then hold it on a Buy-to-Let (BLT) mortgage. A transaction of growing popularity as landlords look to sell up and are choosing to offload properties in bulk rather than offloading individually.
Our Buy-to-Let product doesn’t handle purchasing company share capital to acquire property on its own, but the route exists. Brokers use our bridging finance to complete the share purchase, then exit onto one of our BTL products once the structure is settled and clean. Two products, two proc fees, one lender, one relationship and a case that otherwise gets declined twice before anyone works out why.
If you’re a broker with one of these cases sitting in your pipeline, it’s worth a conversation before you submit anything; the order of operations matters.
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Mortgage Solutions for Clients with Visa Applications & Limited Residency
Several brokers described clients with pending or recent visa positions who couldn’t meet standard residency requirements for a term product.
While our BTL criteria requires a three-year residential history and a permanent right to reside and therefore rules a lot of these clients out at the front door, bridging is more flexible. A number of the cases described to me at the event could be supported on our unregulated bridging products, provided there is a strong exit strategy, and they fit the rest of the criteria points.
Timing here is the problem, and timing is what our bridging products are designed for.
Key Requirements for Mixed-Use and Semi-Commercial Property Cases
We received numerous questions regarding properties that blend residential and commercial elements, a niche where high-street lenders often draw the line.
Our new semi-commercial BTL offering is one of the more distinctive parts of our range. We’ll consider up to 20 residential units alongside a commercial element, provided the asset is more than 50% residential by value, the property is freehold, and there is separate access. Commercial tenants go through full underwriter review, and there are tenant types like fast food outlets, pubs and gambling venues that we won’t accept, so it’s worth checking the specifics early.
It is worth noting that currently, first-time landlords aren’t accepted as semi-commercial. That bit of information caught a few people out in conversation.
Testing Case Affordability Early with Online Broker Tools
Alongside the case conversations, a good number of brokers registered with us on the day. That was one of the more encouraging parts of it, with plenty of people who knew the name but hadn’t placed a case with us, and who left with an account set up and a route in.
I spent a fair bit of the day walking brokers through our online calculators, and what struck me was how many hadn’t come across them. The reaction was consistently good once they’d seen them, which tells me the problem is visibility rather than the tool.
A tool like this is worth five minutes of your time. Running the numbers before you submit means you know where a case sits on affordability rather than finding out after a fee has been paid. For the kind of cases I’ve described above, where the structure is the question rather than the client, that’s exactly the point at which you want to know.
Sequencing Your Case: Bridge First, Term Second
None of these would be considered edge cases. They were ordinary clients whose circumstances didn’t fit the shape of a standard application at the moment they walked through the door, and in several conversations, the quickest way to establish that would have been to run the numbers first.
What struck me across the day is how many had already been declined somewhere, or were being held back because the broker wasn’t sure where to start. In most cases, the answer wasn’t a different client or a different property. It was a different sequence: do a bridge first and a term product second. Takeaway from my message: At LendInvest can support both.