Property Finance
The property finance market has a vast range of lenders and products available, many of whom have stringent and robust processes that need careful consideration and a hands-on approach.
We work with a significant number of lenders in the market, all of whom work differently – whether this is loan to value benchmarks or additional security measures.
Our role in this process is to help you to understand any potential risk associated with property finance and to ensure you have clear and regulated legal advice for your investment property.
What is Property Finance?
Property finance is usually short term (bridging finance) or long term (mortgage), depending on your current situation or planned use of the property. Short term finance is often obtained where you plan to develop or renovate the property – Development Finance – or where for other reasons you are not able to use a traditional bank. Mortgages are used for long term investments, such as Buy-To- Let investments.
In essence, property finance is allowing a lender to take a charge over your property in return for funding. The funding can then be used for various purposes, providing the purpose has been prior agreed with the Lender.
What are the benefits of property finance?
Property finance has many uses and benefits for investors. You may be obtaining property finance to:
- fund a purchase of a new investment property
- release equity from your existing property
- consolidate debts by paying off an existing lender
Property finance is beneficial when you or your business does not have the cash ready available to make that next investment. Property finance therefore makes that next investment more achievable or achievable much sooner, which is often desirable when looking to expand your portfolio quickly. Alternatively, you may be cashing out on your portion of the equity in a property to release equity for a new investment. You may also benefit from property finance by paying off an existing facility to obtain a from more favourable interest rate with a new lender.
When it comes to property finance, it is important you look at all the options available to you before committing. Our property lawyers have a wealth of experience in handling a range of lending products, so they will be able to guide you through which finance solution you choose for your property.
How does property finance work?
As an investor, you may have spent some time looking for the best product for you in the market and our role is to help you secure your opportunity with the chosen lender.
We will be provided with the lending documentation from the chosen lender, at which point we will need to review the loan facility. This process can be straightforward, but there are often hidden complexities.
When you purchase a new investment property with funding from a lender, the lender will need to secure a charge over that property to ensure their funding is protected. As the new investment property is unknown to the lender, they require our legal expertise to ensure the title to the property they are funding is good and marketable.
When you obtain finance against an existing property that you own, you could go through the process of either obtaining additional finance with your existing lender or sourcing finance with a new lender. If you choose to do the latter, again the property will be unknown to the new lender who will need to understand the property from a legal standpoint before they will provide funding.
We must ensure we have advised you on the facility and all lending conditions in full, as well as any elements of risk to both you and the lender before the matter can complete. This gives both you and the lender an opportunity to mitigate risk and negotiate where appropriate before the finance is put in place.
For more information on Secured Lending at PLS please contact us with any questions you may have.
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It’s been a great service from the start of giving PLS the business. The process and systems portal they use is a fantastic tool to update you on the progress of our purchase. I would strongly recommend them for conveyancing.
Gary