Shawbrook explains its move into regulated bridging

Shawbrook Bank’s Commercial Mortgages division recently announced its entry into the regulated bridging market.

B&C caught up with Karen Bennett, Sales and Marketing Director of Commercial Mortgages at Shawbrook Bank, to find out a little more about the new products it has on offer.

Why is Shawbrook bringing this to market now?

The move to regulated bridging was a natural progression from our success within the short term loan market. We wanted to be able to provide a traditional finance solution for chain breaks and those looking to downsize – two of the more common purposes for this type of funding. We’ve undertaken extensive research into the regulated bridging market, and, as our first residential products, these facilities are highly specialised and intended for a specific purpose and proper usage.
We’re always looking for ways to develop our offering in line with the evolving needs of our brokers and their clients, and our priority remains the delivery of the right outcome for the customer.

What is Shawbrook’s regulated bridging offering?

Our regulated bridging loans can be used for two reasons: residents looking to downsize their property and buyers looking to prevent a ‘chain break’ from occurring. Our regulated bridging mortgages are specifically designed for customers who do not want to run the risk of losing a desired property because of an unforeseen delay in selling/re-financing their existing property.

We have two very simple products available that have highly competitive rates. ‘RB1’ is for the customer who wishes to buy a property with no refurbishment works planned. ‘RB2’ is for the customer who wishes to buy a property and carry out light refurbishment works, either on the new property or on their existing property to enhance its value pre-sale.

What are the product specifics?

The rates on the loans start from 0.59% per month and can be taken out at a loan to value (LTV) of up to 70%. Clients can take out loans from £50,000 to £2.5m for a maximum term of 12 months and interest is rolled up, repayable upon exit. We have no minimum repayment term, no minimum interest and no early repayment charges, and the product - like everything within the Shawbrook range - is completely transparent with no unexpected rate increases or fees.

Please note that as these products are regulated, we will only accept applications where an advised sale has taken place within the chain, and where all intermediaries involved have the correct permissions in place.

Can you give an example of when the product could be used?

Scenario: Retired teachers Geoff & Elizabeth Jones have owned their house for 25 years. Their three children have flown the nest and they want to downsize as their property is now too big for their current needs. They find a dream cottage that requires some light refurbishment before they can move in, but they do not want to wait for their existing property to sell as they may lose out to a rival homebuyer.

They spread the finance across both properties (finance is secured against the sum of both values) allowing them to benefit from a lower LTV.

They complete the sale of their existing property six months later, pay down the regulated bridge and are happily settled in their new home and its brand new kitchen without having to worry about waiting through numerous property viewings and estate agent promises.