Case Studies & Articles
Location: London, UK
14th April 2021High LTV Mortgage for London Residential Property
Location: London, UK
Many lenders will be unwilling to let you borrow if they see even the slightest cause for concern them. This will remain the case even if you know you can find a solution or if it’s a relatively minor problem. If you have an unusual project or asset, finding competitive finance packages is also likely to be a challenge, given most lenders like plain vanilla assets and security they are comfortable with. Enness’ expert team of brokers have the experience required to help you source the most competitive and flexible finance, even in highly unusual situations and scenarios.REQUEST A CALLBACK
Lenders like as much certainty as possible, and open-ended questions or uncertainty surrounding planning permission makes it much harder to secure finance. Most lenders will want you to have planning permission before you approach them, rather than there being any open issues that need to be ironed out before your project, development or purchase can go ahead.
It’s worth noting that lenders tend to view any planning ‘issues’ with a wide lens, and even relatively minor problems that can almost certainly be solved can make borrowing impossible.
Mainstream lenders generally can’t finance deals that have any kind of planning issue – even if it’s minor. As a result, you will need to look at niche and alternative lenders who can consider the planning issues in closer detail. Ultimately, you will be looking for a lender with more capacity for risk and who can evaluate planning issues based on how easy they will be to sort out, rather than making a sweeping assumption the issue will negatively impact your property purchase.
The planning issues at the heart of your case, your profile, your experience, and the team solving the problem will significantly sway how willing lenders will be to let you borrow. You will need to have a solid plan to resolve the problem and your strategy must be viable. If you face a planning issue that is impossible to solve from a legal or practical perspective, even lenders who regularly lend against projects where there is some kind of planning challenge won’t consider you. How you present your situation and give your lender confidence in the feasibility of resolving the issue will be essential.
Any deal where there are planning issues are usually seen by lenders as high-risk deals. Expect significantly less flexibility regarding how much you can borrow, and potentially you’ll also need to provide additional collateral to move ahead with the deal.
Enness have contacts everywhere in the market, and your broker will know exactly which lenders can consider your project. Enness will be able to go straight to the sources of the best finance and get you a competitive deal, even if you have planning issues.
It’s not unusual for your reputation will proceed you every time you approach a lender. This often works in your favour, especially when it comes to working with creditors you have borrowed from before or showcasing your track record developing real estate. However, there will be times when your reputation can work against you, in particular when a lender perceives that you bring an element of reputational risk to the deal.
It’s important to note that perceived reputational risk and actual risk are, of course, very different things. Lenders also know this, but they often err on the side of caution when it comes to a borrower that could create reputational risk. Every lender will consider their reputation when they lend, but larger lenders with more stakeholders tend to be significantly more cautious than other players. Most mainstream banks and
institutions won’t lend if they think there is even the slightest potential for reputational risk, even when they know the deal is very secure from every other angle and irrespective of how strong your finances are.
The challenge with perceived reputational risk is that it is measured differently by each lender – there is often no way to know how they will judge you or by which parameters they will make an assessment. It is highly frustrating, especially if lenders are influenced by scenarios or circumstances that are wholly outside your control – litigation you are affected by but not directly involved in as a claimant or defendant, for example.
If you face a scenario where lenders think you bring a reputational risk to the project, securing financing will usually be a case of who you know, not what you know. Some lenders will work with you even if the wider market perceives to bring potential risk to a deal, but they are specialist and niche, and they don’t publicise any kind of openness to do so. Finding these players is challenging if you are operating alone, and often, introductions from a party like Enness who know who these firms are will be required to connect with them in the first place.
You will need to have a strong case and provide factual context into why you don’t pose so much reputational risk that borrowing needs to be off the table. Expect lenders to assess you very carefully, and their questions will be forthright. Answering them in kind and with confidence is imperative. Enness’ brokers will be able to help you do so, and they will also help lenders understand the wider context of your situation and present your application in the best possible light.
Enness will help you source and negotiate unusual property finance, regardless of which type of asset you wish to buy or develop. The team has significant experience with financing land, purchase of large retail spaces, warehouse developments, leisure and tourism developments and unusual commercial projects, amongst others.
If you want to purchase more exotic or unusual assets using your property as security, Enness will also be able to help you finance such purchases. Property can be used as collateral to buy all sorts of asset, including (but not limited to) art, sports cars, watches and so on.
What you want to buy and your ambitions will affect who Enness approaches for your finance. Whether you wish to borrow significant capital to buy or develop real estate, Enness will be able to source finance for you. With access to all the lenders in the space, your broker will know exactly who will offer the most competitive rates and flexible terms.
What you will pay for this type of finance will depend on how much you want to borrow and the asset(s) in question. If you are financing a more unusual project, in some instances, you will be able to borrow less and may potentially need to put additional security forward to give lenders more comfort.
Lenders weigh risk very carefully when it comes to any kind of property purchase, but when there are restrictive or unusual covenants involved, they will tread even more carefully. It’s worth noting that restrictive or unusual covenants alone are not necessarily an issue for lenders. However, they become a problem if they could affect your property significantly or if they are very limiting for any number of reasons. Often this will translate into a struggle to find a lender who will finance your project.
Not every lender has the appetite or capacity to lend against property with restrictive or unusual covenants. However, some will be happy to lend, provided your plans are feasible and workable with the covenants and won’t negatively impact your real estate.
If the property you want to buy will be affected by restrictive or unusual covenants, how you present your application to lenders is critical. Having sensible plans to tackle the issue head-on is likely to be seen favourably by lenders.
It will be helpful to have a skilled team like Enness work alongside you. Your broker can present your plans, answer lenders questions, and present your application with confidence. As well as sourcing and negotiating finance, your broker will also know what kind of questions lenders will ask, where they will focus their enquiries, and where you will need to give the strongest answers. Always working on your side, Enness will help you source finance quickly and efficiently.
When mainstream lenders can’t finance the real estate you want to buy, it usually makes sense to approach specialist lenders. While this logic is sound, it takes considerable time to make individual applications to specialist lenders on a case-by-case basis. You’ll often have in-depth conversations with multiple lenders and deal with their individual requirements, which is challenging to juggle, especially if you need to arrange finance quickly. However, specialist lenders aren’t always the quick-fix solution you’re looking for, and many can’t or won’t offer a mortgage or give the green light on finance for any number of reasons. If you find yourself at such an impasse, it can be difficult to know what to do next.
Enness’ property finance brokers regularly work with clients who have been declined financing by both mainstream and specialist lenders. If you have an unusual or complex project, getting finance is often a question of who you know. Lenders tend to have preferences for certain types of projects, and many prefer introductions from parties like Enness if you have been turned down by other lenders as it provides additional comfort.
With experience brokering significant loans on unusual property and assets, Enness knows how to help you solve problems and where to go to secure competitive property finance for you as quickly as possible. Contact Enness to chat about what you might need and how the team can help you.Schedule A Callback