Property Development - Buying Investment Property With Bad Credit Short Term Loans In The UK

Sept. 4, 2012 - PRLog -- With the recession and general unwillingness to lend by the major highstreet bank lenders, this has created a massive increase in bad credit and adverse credit products entering the market. With these products you pay far higher rate but at least you get the desired outcome you need to move forward.

What would you rather? Get a loan approved for a property mortage purchase in 1-3 weeks (dependant on the amount), no or little questions asked or spend months with lawyers and so called financial services experts proving income, outgoings, values, credit checks and many other areas.

In reality all the high street banks do these days is waste time, effort and money.
This has lead to a new development in the market, that is known as bad credit loans.

Bad credit short-term loans are basically loans issued for people with adverse credit, high student loan repayments or have very poor credit profiles. In the UK alone these days unfortunately this category of people is on the rise. These loans can be anything short-term unsecured personal loans (usually guarantor based or payday loans with high loan repayment some over 2000% apr) to far higher secured loans.

In the property industry especially property developers and people buying investment property these loans are being utilised at a far higher rate than any other groups.

Property investors and developers have been the hardest hit, not only have their assets lost value, they are unable to sell their current projects and the banks will not lend them any money to expand.

These groups have turned to bad credit finance products through desperation at first but found that the product suits them far better than anything else.

The product these individuals utilise are usually non-status bridging finance and bridging loans. These products are structured towards property based transactions, whether it be releasing equity in your current portfolio of assets or buying an investment property.

Non-status bridge finance products cater for bad credit individuals, people who have adverse credit, CCJs/IVAs and a general poor credit profile/score. These bridging loans are structured to pay more attention to the project rather than the individual, as long as the project stacks up they will base their decision solely on this.

For more information on bridging finance visit http://www.primebridgingsolutions.com.

James at Prime Bridging Solutions states “We warn customers to be careful as there are some bridging finance products and companies that do not offer non-status and only offer full-status, this acts in the same way as the high-street banks with very similar lending criteria. These are no good for bad credit individuals which is the majority of enquiries we see”.

Bridging finance is a massive growth area and has continued to grow at a fast rate since the recession. The majority of calls the short-term finance firms get these days is mainly related to bridging finance and property based transactions.

There are certain drawbacks with bridging finance geared towards adverse credit, these are as follows:

•   The rates are very high (usually 1-2% dependant on lender).
•   Finance is restricted by 6-12 months, very short-term lending.
•   You need a solid exit route (sale or refinance). This is a must with all lenders.
•   The borrowing is wholly dependant on the market valuation of your property.
•   Borrow minimum £25, 000 (although regulated firms can only lend £50, 000)
•   Market over saturated. Too many brokers out there few lenders.
•   The decision with some lenders comes down to one person.

There are some very good property finance and investment forums out there for people considering bridging finance as a form of finance, these are singing pig, propertyexpert.tv, propertytycoons.net to name a few (a google search on "non status bridging loans" will show more firms active in this area).

Bridging finance can be complicated and it is not the best route for everyone, you should look at your project, personal and financial situation before you look at these areas of finance.

Having said that it still remains a very high growth area within the property finance industry and as far as I see it for the next 12-18 months will remain the only product out there for individuals with bad credit that want to purchase an investment property.