Bridging outside the M25

Bridging outside the M25


Most bridgers seem reluctant to lend outside the M25 – but not all. Bridging & Commercial heard from Gavin Diamond, Finance Director at Cheval, on the geographical reach of lenders in the bridging industry today.

The gap between London residential property prices and average values in the rest of England and Wales is at its widest for ten years, according to recent research from Savills. It shows that a typical home in London is now worth 113% more than the average, compared to a differential of 73% in 2005/06 and just 47% in 1995. Per the latest Land Registry figures, London is also the only part of the UK where prices have risen year on year.

With this in mind, no one should be particularly surprised to discover that bridging lenders typically feel more comfortable securing their loans on London properties than anywhere else in the country. After all, if a transaction goes sour, it is likely that the short-term lender will have to look to the security to recover amounts due. This is basic economics and all providers of secured finance would include basic factors such as house price values and local market buoyancy in their decision making.

As a result, transactions within the M25 are the subject of intense competition between lenders. And the increased competition for deals in this area has contributed to products being designed to capture business, often at lending rates that are seemingly unsustainable in the longer-term.

However, there are transactions with security properties outside the M25 that still require funding – and there are short-term lenders, like Cheval, that are genuinely prepared to lend throughout England, Scotland and Wales.

It needs to be remembered that there are bridging loans completed outside the M25 every day of the week by a range of lenders, including Cheval, who are more than comfortable lending outside Greater London to those with propositions that stack up.

One of our key differentiating factors is our ability to be a ‘one-stop shop’ for your lending requirements. We offer regulated (FSA and CCA) and non-regulated loans and are genuinely prepared to lend throughout England, Scotland and Wales. This is one of our USP’s that we are highlighting at our stand at this year’s Mortgage Business Expo.

We base our lending decisions on the fundamentals and merits of a deal, not just the geographic location of the security property. Naturally the security property is important, but so is the purpose of the loan, the client's personal circumstances, and the viability of the exit strategy.

Many lenders, particularly those based in the South, are uncomfortable lending in Scotland as not only is it geographically further away but the legal process is quite different.

However, for experienced lenders such as Cheval the principles remain the same: if the application is convincing, we will lend. Good deals should always be able to find a home.

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