This month I would like to focus specifically on two products that I see as being an essential part of any broker’s toolkit.
Yet, based on my own broker feedback, surprisingly, they are products that are still not that well known and as a result are massively under-utilised.
The first is Dragonfly Property Finance’s bridge-to-let product, which was launched in November, so is by no means a new product. The product is a clever hybrid of a conventional seven-month bridging loan and its two- or three-year medium-term loan product.
With an initial bridging rate of just 0.749 per cent a month and available up to 70 per cent LTV, borrowers have the option to exit the bridge with no ERCs within the initial seven-month period.
Or they can choose to switch to the two- or three-year fixed-rate buy-to-let product, all without the need for any further underwriting requirements or additional documentation being completed.
The medium-term buy-to-let product is priced at the same rate of 0.749 per cent a month or the equivalent of 8.99 per cent per annum.
There is also an option to defer 2 per cent interest off the annual charge rate, taking it down to 6.99 per cent per annum or 0.58 per cent a month. The 2 per cent deferred is paid at the end when the loan is redeemed.
Dragonfly also announced it has passed the £500m in new lending mark and it also predicts it will hit £1bn in new lending within the next 18 months.
I was also delighted to hear that it has recruited a good friend of ours, Maria Magnussen, as senior business development manager. Magnussen joins Dragonfly from Savills Private Finance, where she was a director and also its top broker for two consecutive years. Working alongside Dragonfly’s head of sales and marketing Mark Posniak, I am certain she will prove a real asset to its business in no time. Having been a broker herself and operated at the very top of her profession, she will know things from both sides of the fence.
Back to the products and another example of a bespoke refurbishment product is Shawbrook Bank’s short-term finance for light refurbishment – or STL 4 and STL5.
This is available up to 70 per cent for residential properties and 65 per cent for mixed use properties with mixed residential or commercial use.
Loans are available from £75,000 to £10m they lend to a maximum term of 12 months, with no minimum term and no minimum interest payable.
The pricing for this product is 0.73 per cent a month, with flexible repayment options available, including retained, serviced or part-retained for three months followed by serviced monthly.
This product can really work well for experienced investors and property developers, with a proven track record in this field.
Realising that not all clients will just want a short-term bridging product, which also allows for light property refurbishment, Shawbrook also has a complimentary medium- term light refurbishment –
MTR1 product, which is available to clients looking for a three- or five-year medium-term buy-to-let product.
This clever product enables experienced investors and landlords to borrow 70 per cent of the initial purchase price, undertake light refurbishment
to the property and let it out.
It has six months from the date of the initial advance to complete the refurb and get the property let.
At this time, a re-inspection is done and Shawbrook will offer a further advance, held day one as a retention equivalent to the difference between 70 per cent of day one value and 70 per cent of after-works value.
This enables clients to pull equity out of the deal without the need to take a six-month bridge and then refinance after six months on to a buy-to-let deal and pay another set of valuation, legal and completion fees.
Rates are currently at 4.95 per cent above three-month libor, making it a competitively priced buy-to-let product which carries a 2.5 per cent facility fee which is added to the loan outside of the maximum LTV.
This comes in the same month that Shawbrook has also reduced standard bridging rates down further to just 0.65 per cent a month and also reduced the arrangement fee on its term lending products from 2.5 per cent to just 1.70 per cent.
It has also recruited an additional four BDMs to its salesforce and increased the broker proc fee payments. Shawbrook Bank clearly means business.