<
p>A new bridging lender is set to double its loan cap to £1 million, marking the second expansion to its maximum loan amount since launching.
After increasing the maximum loan from £350,000 to £500,000 in September, Sterling Property Finance planned to inflate it further by two or three fold over the following 12 months. A few weeks later the loan cap jumped to £1 million.
On speaking about the impact of the new rise, Anthony Fane, Director of Sterling Property Finance said: “I would hope all it really does is expand what is already a growing business.”
In explaining the decision on raising the cap now, Anthony explained in the early stages of building a loan book it would be unwise to incur heavy concentration risks with high value loans.
Now, Anthony said Sterling Property Finance has had “...drawn down somewhere excess of £4 million in little loans, so to do a £1 million loan now would be less concentration risk.”
On future ventures, Anthony said: “We would like to have access to the £1.1 to £1.2 million mark.” However, he continued, go too high in loan size and focus is placed too far away from smaller developers. He said: “What we do not want to do is compete with banks. Entering a bidding war with a bank is pointless. Onwards from here our direction is to develop relationships with £150,000 to £1 million developers.”
The lender’s flexibility in expanding its loan size exists because of its financial arrangement. Sterling Property Finance has a single financial backer and has £25 million of total loan capital.
James Gibbs, Business Development Manager for Sterling said following the previous increase they received a flood of inquiries. “Broker reaction has been like a sigh of relief. So far we have had a lot of positive comments on the way that we work with the brokers. “
He added: “The loan cap has been a restrictive factor for a lot of these guys.”
According to James there were five development inquiries lodged yesterday morning all around the £750,000 to £800,000 mark.
James continued to explain that Sterling’s tie with lending partners allows them to make complex exceptions for enticing deals slightly over the cap.
Introducing brokers receive 1.5 per cent of Sterling’s two per cent arrangement fee. They will also receive 0.15 per cent monthly trail commission.
Sterling provides funding for second and first charges for bridging, development and mezzanine finance with loans being secured on residential or commercial properties. They are flexible in criteria and will decide on deals via a case by case basis with its credit committee.
Last month, the bridging lender dropped its rates from 1.15 per cent to 0.95 per cent as a result of feedback from brokers. The rate applies to its bridging products on first charge non-main residential properties.
The lender received six applications reaching the DIP stage within three hours of announcing the rate drop.
A new bridging lender is set to double its loan cap to £1 million, marking the second expansion to its maximum loan amount since launching.
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