Getting my mortgage is taking ages
You are not the only one ! At the time of writing the value of mortgage approvals has hit a monthly record. The highest since the BPFI started collecting data in 2011. It means the lenders are inundated. In addition to this, we are also seeing Ulster Bank and KBC exiting the lender market. Turnaround times on every step from application to approval is extending.
But I really need it done quickly
Everyone wants to get financing in place as soon as possible. There are some urgent examples. A buyer committing by deposit at a residential auction generally faces a time limit to raise funding. A property owner who has negotiated a settlement with a private equity fund but who needs to deliver the settlement in a tight time-frame. An investor who is looking to purchase, refurbish and sell in a relatively tight timeframe.
But also an entrepreneur who is keen to start a business by releasing equity on owned property. And in general for anyone who will ultimately get financing via a traditional mortgage but wants to move more quickly than that.
Tell me more
Bridge financing is financing that can be obtained potentially far more quickly than mortgage financing. The idea is that with a bridge financier who can provide funding quickly, the property transaction can close without delay. Very often, the application for bridge financing is run alongside the traditional mortgage application. Finally the mortgage finances pay off the bridge loan. And the buyer is left in the standard position of property plus mortgage.
Do the regular mortgage lenders also provide bridge financing ?
Whilst some of the traditional lenders may offer bridge financing occasionally, it is mainly innovative, fully-dedicated new entrants that are in this space. An example is Onate (www.onate.com).
What can Onate do?
Property entrepreneurs and investors looking for bridging finance are able to get loan finance for residential properties in a matter of days, thanks to Onate. Onate provides fast and flexible finance secured against residential investment property ("Residential Bridging Loans") for a term of up to two years, from €150k to €2m, using modern technology solutions. This includes loans for debt settlement, property purchase, light refurbishment and equity release.
The loans can be structured with terms of up to 2 years. But they can be repaid early after 90 days without penalty. The flexibility gives the borrower plenty of options. The loan size depends on the area. But in general can be up to 65% LTV in areas close to Dublin, Cork, Galway & Limerick.
And they can move fast?
Onate can approve a bridging loan in a few hours as all their decision making is in-house and they can have funds with the borrower usually within a few weeks of terms being agreed. They recently closed a €1.3m loan secured on three Dublin residential investment properties in only 10 days!
Tell me more about Onate
Set up in 2020, Onate was founded by CEO Dan Gandesha with backing from Will Neale and Christian Faes.
Dan is joined at Onate by experienced staff, who have decades of industry experience between them. They include Hugh Lyons (Lending Manager), John Ring (Senior Lending Manager), Paul O'Sullivan (Senior Underwriting Manager) and Shane O'Connor (Underwriting Manager).
What does it cost?
For the flexibility and the speed of execution, the costs are higher than a regular long-dated mortgage loan. However, the actual cost can be managed with quick repayment of the facility.
The fees are 1% per calendar month with a 3% arrangement fee. There are no exit fees. The costs can be further reduced by repaying the facility without any makewhole costs at any time after 90 days.
Anything else I should know?
As is standard with most alternative lenders, Onate require the borrower to be a Limited Company. If an individual comes to Onate, they will have to set up an SPV (special purpose vehicle) if they don't already have a company. This is straightforward and most solicitors / accountants will be familiar with the process.
What next?
Speak to us at AM Financial to determine whether a bridge loan may be in your interest. AM Financial can assist you with your application if this suits your circumstance.