Blog

Clever Lending’s Matthew Dilks Wins UTB Specialist Award

Posted on | by Damien pepper

Clever Lending, the specialist finance packager and master broker, has announced that Matthew Dilks, one of its commercial and bridging specialists, has been recognised for his talents by United Trust Bank (UTB).

Dilks, who has worked at Clever Lending for nearly six years, was presented with UTB’s ‘Specialist of the Year’ award at a recent dinner the bank held for its key introducers in the North of England.

UTB gave awards to individuals in each region, rewarding their unique skillsets.

Dilks was recognised for his expertise in bridging finance, having successfully placed many cases with UTB over the years. At Clever Lending, he is primarily tasked with helping clients and brokers source financing for bridging loans, commercial mortgages, development finance, and buy-to-let properties and portfolios.

Matts Award and hamper

Paul Delmonte, key account manager at United Trust Bank, commented:

“Matt fully deserves the recognition from this award. Over the years we’ve worked very closely together on a number of transactions that has helped his clients reach their goals.

“Working with Matt is an absolute pleasure. His attention to detail and understanding of lending criteria is of the highest standard. I’m really looking forward to continuing working with him and the Bridging team going forward”

“We worked closely with the lender and client to ensure a positive outcome, once again showcasing Clever Lending’s ability to get results for our broker partners.”

Matthew Dilks, commercial and bridging specialist at Clever Lending, added:

“I was genuinely touched to receive this award from United Trust Bank – to be recognised for my skills by a leading bridging lender is very gratifying.

“At Clever Lending, I’ve worked closely with UTB on many cases and they are excellent to deal with, always happy to go the extra mile to get the right result for the client. In my mind, this award also recognises the team at Clever Lending who all play their part in getting difficult bridging cases successfully completed.”

Mobile home to Scottish home, using regulated bridge finance

Posted on | by Damien pepper

Clever Lending, the specialist finance packager and master broker, has announced that it has recently packaged a £180,800 regulated bridging facility for a residential property purchase in Scotland.

The clients had spent several years travelling across the UK in a mobile home before deciding they wanted to purchase a residential property in Scotland. They elected to use bridging finance to complete the purchase quickly.

Their exit strategy was to drawdown one of their pensions on their 55th birthday, which was around six months into the life of the bridging loan.

Matthew Dilks, Commercial and Bridging specialist at Clever Lending, placed the case with a lender that he knew would meet the customers’ requirements: it would lend on properties in Scotland; it would use a simple valuation and also offered competitively-priced regulated bridging rates.

Clever Lending worked closely with both the clients and lender in order to complete the loan within eight weeks. It required several workarounds, including the use of Scottish ID verification and the offer letter detailing Scottish law rather than English law.

The regulated bridging loan was for 12 months at a loan to value (LTV) of 49%, with a rate of 0.64% per month.

Matthew Dilks, commercial and bridging specialist at Clever Lending, commented:

“Regulated bridging finance is a popular solution but not one that is offered by all bridging lenders, while even fewer are willing to lend in Scotland.

“As a master broker with expertise in bridging, we have close relationships with a wide variety of lenders, meaning we can place those cases which others struggle to handle.

“We knew of the ideal lender with this application and they worked quickly to assist the clients in progressing the case without delay, despite the issues with Scottish law.”

The lender, added:

“This transaction demonstrates the banks flexibility perfectly when it comes to Bridging Finance and shows our ability to be able to move quickly to get cases funded.

“It’s always a pleasure to work with Clever Lending on any transaction. We have worked closely over the years which has helped us develop a fantastic working relationship which really adds value.

“We are looking forward to continuing our strong working relationship in the years to come.”

Clever Lending completes regulated bridging loan in Scotland

Posted on | by Damien pepper

Clever Lending, the specialist finance packager and master broker, has announced that it has recently packaged a £180,800 regulated bridging facility for a residential property purchase in Scotland.

The clients had spent several years travelling across the UK in a mobile home before deciding they wanted to purchase a residential property in Scotland. They elected to use bridging finance to complete the purchase quickly.

Their exit strategy was to drawdown one of their pensions on their 55th birthday, which was around six months into the life of the bridging loan.

Matthew Dilks, commercial and bridging specialist at Clever Lending, placed the case with United Trust Bank (UTB) as it met a number of requirements: it would lend on properties in Scotland; it would use an AVM valuation and also offered competitively-priced regulated bridging rates.

Clever Lending worked closely with both the clients and lender in order to complete the loan within eight weeks. It required several workarounds, including the use for Scottish ID verification and the offer letter detailing Scottish law rather than English law.

The regulated bridging loan was for 12 months at a loan to value (LTV) of 49%, with a rate of 0.64% per month.

Matthew Dilks, commercial and bridging specialist at Clever Lending, commented:

“Regulated bridging finance is a popular solution but not one that is offered by all bridging lenders, while even fewer are willing to lend in Scotland.

“As a master broker with expertise in bridging, we have close relationships with a wide variety of lenders, meaning we can place those cases which others struggle to handle.

“We knew UTB would be the ideal lender with this application and they worked quickly to assist the clients in progressing the case without delay, despite the issues with Scottish law.”

Paul Delmonte at United Trust Bank, added:

“This transaction demonstrates the banks flexibility perfectly when it comes to Bridging Finance and shows our ability to be able to move quickly to get cases funded.

“It’s always a pleasure to work with Clever Lending on any transaction. We have worked closely over the years which has helped us develop a fantastic working relationship which really adds value.

“We are looking forward to continuing our strong working relationship in the years to come.”

Understanding Gross Development Value calculations

Posted on | by Damien pepper

By Matthew Dilks, Bridging and Commercial Specialist, Clever Lending

In the property investment and development world, gross development value (GDV) is an important metric used to determine what a project may be worth on the open market once all the planned works have been completed.

Significance of GDV

Gross development value is a significant calculation as it is the foundation on which all other aspects of a build are determined. This includes the cost of acquiring the development site, the cost of construction and other associated works, the profit margin of the developer or investor and the likelihood of a successful and profitable financial outcome.

Stephen Henman, Managing Director at Method Valuation UK, said:

“The way in which GDV is calculated is extremely complex and can prove to be a minefield for many brokers, particularly those unfamiliar with working in this area of the specialist lending market.”

“At Method we see at close quarters the impact of the complex nature of GDV calculations. This can occasionally cause friction during the valuation process and is exacerbated by current market conditions,” he says.

“It’s important that brokers and lenders are fully aware of the contributing factors to the GDV calculation, particularly the impact of the developers anticipated profit margin on the GDV.”

Lender-Specific Criteria

Understanding the way in which lenders calculate GDV is crucial to securing funding in any development finance project because it can vary hugely between projects and also differs vastly from the standard loan-to-value (LTV) ratios used in residential mortgage loans.

Different lenders also use different methods to determine affordability, with the most common being the GDV plus costs. This can typically be between 50% to 70% GDV plus up to 100% of the construction and development costs, but will depend on the size of the deposit, the experience of the developer, the feasibility of the project and the planned exit strategy.

Each lender also has its own lending criteria as well as a minimum and maximum on borrowing amounts, which can range between £50,000 and £50 million. Proof of a solid exit strategy will also be critical as your ability to sell or remortgage the development will also determine the GDV value.

As a general rule, lenders like to see an expected 20% minimum profit built into any development plan, with the GDV calculation split into thirds across the purchase cost, the cost of works and projected profit.  Examples of this can be seen in the figures below, with example 1 showing the three splits and example 2 showing a 20% profit.

Day One Valuation

Lenders also tend to work backwards from the GDV calculation to work out the current valuation for day one of the lend and will deduct any expenses, development costs and contingency costs built into the calculations which can result in a lower valuation than what the client may expect.

Understanding this is crucial as it can sometimes be an issue on day one of lending as clients may find the current value to be quite a bit lower than what they expected. This is an important factor to take into consideration as it could impact the project and cause delays. 

Seeking Expert Guidance

Calculating GDVs is an extremely complex process so brokers who are unsure of how a case should progress, should talk to a trusted development finance expert who can help them through the process. This will not only help to alleviate the pressure of placing the business, but also ensure they are providing their clients with an accurate GDV calculation on any planned development finance project.

In the Spotlight – Mark Colyer, Commercial and Bridging Case Manager, Clever Lending

Posted on | by Damien pepper

Tell us a little bit about yourself and your role at Clever Lending?

I am a commercial and bridging case manager at Clever Lending and have been with the business for just over five years. Previously, I worked in finance in an accounting role but this is my first position in the commercial and bridging sector and I have learned on the job and via in-house training with the team.

As a case manager, my role is to ensure our brokers and clients receive the best service possible, so that each individual case is completed within suitable time frames and to help manage their expectations. It is a busy and challenging role and it keeps my mind active and on your toes. No two cases are ever the same, which is one of the many reasons I enjoy my role, with the variety of cases and their requirements. There is no better feeling when you know the case has completed and you have been able to make a difference by helping people secure the financing they need.

What types of cases do you mostly handle and what are you seeing more of so far in 2023?

We specialise in commercial, commercial buy-to-let (BTL) regulated and unregulated bridging and development finance and I would say most of the time, our cases are split quite evenly, although we have recently had a slightly higher number of commercial BTL cases.

There are still landlords whether experienced or new to the sector looking to purchase and add to their portfolio particularly if they have equity in their existing stock while others are trying to refinance either because they are trying to reduce their rates or are coming off a fixed rate after two or five years.

If you could give one or two tips to brokers looking to submit cases, what would they be?

One key tip is to double check and thoroughly review everything before submitting an application to make sure there is no information missing. It can be very easy to overlook something and this can cause delays and be problematic, particularly in bridging cases when things need to move quickly.

Another is If a client is refinancing a recently purchased property, it is also always worth making sure land registry is updated with the new ownership, as we often encounter situations where this information has not been updated, which slows down the application and can increase costs.

Can I be cheeky and add a third, here at Clever Lending we always want to pass on our expertise … It is also helpful if a broker supplies us with an ideal completion date as this helps us manage client expectations, particularly if the broker is unfamiliar with the commercial market.

What common problems occur between issuing terms and completion and how do you work with lenders, valuers, solicitors, brokers and their clients to resolve these?

In cases where a person is purchasing a property using gifted funds as a deposit, one of the most common problems we encounter is making sure we have all the relevant information we need in terms of who is gifting the money and evidence related to where the funds came from.

Lenders are especially hot on anti-money laundering checks, so making sure all this information is readily available is important. Providing a good pack and a good level of communication throughout is also vital.

As an expert on complex cases, are you seeing more complexity generally and are there any common aspects you see more of now than say 12 months before?

We may occasionally encounter cases where we may need to go into pension schemes or SIPPs for refinancing purposes, but they are very few and far between. Most of the cases I come across are relatively straightforward in terms of purchases or refinances.

Some cases of underwriting have become a little bit more complex over the last few months, mainly due to the tightening of lender criteria and uncertainty in the market. Bank statements can also prove challenging as we need to be able to identify and explain where all funds come from before we submit the case to the underwriter, otherwise questions will be asked.

What benefits do brokers have when working with a business such as Clever Lending rather than them doing the case themselves?

We understand what lenders require when submitting an application and offer a full packaging facility that means cases are seen through from start to completion.

Our knowledge and experience of working in the specialist market means we are able to quickly and efficiently package a case and tap into a market that brokers often cannot access in terms of special rates and access to lenders. This can help brokers save time and means they don’t have to deal with solicitors, valuers, or estate agents, as we do all that for them.

Clever Lending Completes £1.9m MUFB Refinancing

Posted on | by Damien pepper

Clever Lending, the specialist finance packager and master broker, has announced that it has recently helped a customer who needed to refinance a Multi Unit Freehold Block (MUFB).

The client, a construction company, required the refinancing in order to consolidate its existing portfolio lending and intercompany loans. It also wanted to capital raise for onward investments to buy and renovate other properties.

With MUFBs, a single freehold property is usually split into individual flats or a row of houses under one title. In this case, there were 21 properties under a single title.

Using his knowledge and experience of MUFBs, Steve Sanderson, commercial and bridging specialist at Clever Lending, knew a lender that would immediately accept the case and placed it with them.

The refinancing was at 63% loan to value (LTV), with the £1.9 million loan provided against a £3 million valuation.

Steve Sanderson, commercial and bridging specialist at Clever Lending, commented:

“Many buy-to-let lenders only deal with vanilla cases, this is where the specialist lenders kick in, as this was a far from straightforward proposition. However, we have worked with this lender on many occasions and know they specialise in providing solutions for property investors with complex requirements.

“We worked closely with the lender and client to ensure a positive outcome, once again showcasing Clever Lending’s ability to get results for our broker partners.”

The lender, added:

“I’m thrilled to have collaborated with Steve at Clever Lending again, in what is another fantastic example of how we can work with highly experienced broker partners to support their clients with complex requirements.

“Our expertise in handling intricate buy-to-let cases, such as this Multi-Unit Freehold Block, allowed us to provide a tailored solution to allow the client to refinance not only their existing portfolio, but to raise capital for future investments.”

Clearing Up Refurbishment Finance Misconceptions

Posted on | by Damien pepper

By Matthew Dilks, Bridging and Commercial Specialist, Clever Lending.

For property investors looking to secure financing for development projects, it’s crucial to understand the distinctions between light, medium, and heavy refurbishment loans. However, there still seems to be quite a bit of confusion surrounding what qualifies as light or heavy refurbishment and what information is necessary to obtain funding.

The Significance of a Detailed Schedule of Works

Mistakes in applications for refurbishment finance are quite common, often leading to revaluation and resubmission, which can be time-consuming and add extra work for brokers and lenders. Dispelling this confusion is essential as it can help both brokers and investors gain a better grasp of lenders’ requirements, streamlining the application process.

In most cases, light refurbishment typically involves cosmetic updates to a property, such as plastering, painting, new flooring, or the replacement of fixtures and fittings like a new kitchen or bathroom.

This means that most lenders won’t approve structural work or projects requiring planning permission, permitted development, or building regulation approval for light refurbishment bridging loan applications. Such developments would be considered heavy refurbishment.

Challenges and Client Expectations

In many cases of light refurbishment, there’s a common misconception that if the client doesn’t need the lender to finance building costs, proof of funds for refurbishment expenses won’t be required. However, this isn’t the case. A comprehensive schedule of works is one of the most critical aspects for investors, whether it’s for light or heavy refurbishment financing.

Similarly, in many heavy refurbishment cases, clients often anticipate receiving a building quote based on rough, approximate figures for the works. However, once again, a detailed schedule of works is imperative.

This schedule should outline the work to be carried out, the cost of each element, the expected duration, and the inclusion of any contingency fund that can be utilised in case of delays or overspending during the project.

In heavy refurbishment scenarios, clients must ascertain the current site value, understand the refurbishment costs, and have realistic expectations regarding timelines, especially as lenders won’t finalise the loan until planning permission is granted.

One factor that isn’t always considered by applicants is that if building costs are high, the project involves extensive work compared to the original property, or if most of the property is being rebuilt, it will be classified as a full development. This results in higher rates, in line with the level of information required by the lender.

Another crucial aspect in all refurbishment finance cases is Gross Development Value (GDV). This aspect is often misunderstood, with clients if lenders will base the maximum day one loan on GDV rather than the current value at day one.

Understanding Gross Development Value (GDV)

It’s essential to grasp this distinction. GDV is calculated based on the prevailing market conditions at the valuation date, and it may also consider recent property transactions for similar properties around the development.

This calculation can include asking prices, sale prices, data provided by letting or estate agents, or assessments from development surveyors. It may also be part of an initial development appraisal and continuously assessed to determine the project’s profitability.

As with all bridging loans, having a solid exit strategy for refurbishment finance is critical, particularly in these economically challenging times. In some cases, having two exit strategies may be preferable to account for any unexpected changes.

Exit Fees, Valuations, and Inspection Fees

Lastly, keep in mind that most lenders typically charge an exit fee. In “full” development finance cases, costs such as rates, valuations, and quantity surveyor re-inspection fees will increase as the project progresses.

Therefore, it’s advisable for investors to aim for projects falling within the light to heavy refurbishment categories. This approach can result in reduced funding costs, shorter underwriting times, and a wider selection of lenders.

Clever Lending Completes £1.9m MUFB Refinancing With HTB

Posted on | by Damien pepper

Clever Lending, the specialist finance packager and master broker, has announced that it has recently helped a customer who needed to refinance a Multi Unit Freehold Block (MUFB).

The introducer had a long-established relationship with Clever Lending and their client, a construction company, required the refinancing in order to consolidate its existing portfolio lending and intercompany loans. It also wanted to capital raise for onward investments to buy and renovate other properties.

With MUFBs, a single freehold property is usually split into individual flats or a row of houses under one title. In this case, there were 21 properties under a single title.

Steve Sanderson, commercial and bridging specialist at Clever Lending, discussed the case with Wes Baker and then placed the case with Hampshire Trust Bank, he knew from experience that the lender could deal with complex buy-to-let cases, including those involving MUFBs.

The refinancing was at 63% loan to value (LTV), with the £1.9 million loan provided against a £3 million valuation.

Steve Sanderson, commercial and bridging specialist at Clever Lending, commented:

“Many buy-to-let lenders only deal with vanilla cases, this is where the specialist lenders kick in, as this was a far from straightforward proposition. However, we have worked with HTB on many occasions and know they specialise in providing solutions for property investors with complex requirements.

“We worked closely with the lender and client to ensure a positive outcome, once again showcasing Clever Lending’s ability to get results for our broker partners.”

Wes Baker, property specialist for the North and Midlands at Hampshire Trust Bank, added:

“I’m thrilled to have collaborated with Steve at Clever Lending again, in what is another fantastic example of how HTB can work with highly experienced broker partners to support their clients with complex requirements.

“Our expertise in handling intricate buy-to-let cases, such as this Multi-Unit Freehold Block, allowed us to provide a tailored solution to allow the client to refinance not only their existing portfolio, but to raise capital for future investments.”

Social Housing – An investment opportunity

Posted on | by Damien pepper

As a GOLD partner, Clever Lending are working with Together to bring you areas of property investment opportunities where there continues to be growth and demand.

Your property investment customers might be interested in Social Housing.

Lets talk about Social Housing

With only 6,500 social rental homes built of the 90,000 needed each year, there is an opportunity in this market for landlords looking to support this underserved area.

Landlords may be struggling with rental yields on ASTs as a result of increased interest rates and could be looking to diversify their portfolios.

High street lenders appetite becomes more restrictive during challenging market times, and this is where specialist lenders can step in and support.

Why work with Clever Lending for your Social Housing enquiries?

With Together, Clever Lending can offer your customers:

  • Lease income rather than market rent can be considered for our affordability assessment
  • Hometrack and internal funding criteria available*
  • We can provide funding to purchase or refinance care homes – both children and adult care homes
  • Properties let directly to a local housing association are acceptable, including long leases
  • We can also lend against properties let to vulnerable tenants subject to a review of the lease agreement
  • No criteria limiting the maximum number of bedrooms in a HMO or maximum number of units in a MUFB
  • BTL, Commercial term and bridging funding solutions available based on the property type and customers borrowing needs
  • Industry leading professional Alex Bodie heading up Togethers dedicated Social Housing channel

*Please speak to Clever Lending for full criteria

We are here to help customers realise their property ambitions, and we do so by providing exceptional customer service and funding solutions at speed.

To discuss your social housing enquiries, please do not hesitate to get in touch with the Clever Lending team on 0800 316 2224.

Homeowner business loans

Posted on | by Damien pepper

Nicola Ferguson, Bridging and Commercial Specialist, Clever Lending

One of the main challenges of setting up or running a new business is the costs associated with getting it off the ground. It can often be difficult for new business owners to secure funding, particularly if they have little or limited accounts history and this can often stop any plans to grow a business in its tracks.

The Growing Need for Financing New Businesses

Despite this, one in three UK adults planned to start a new business by 2024, according to the 2021 Global Entrepreneurship Monitor (GEM) UK report, seemingly undeterred by the effects of the 2020 global pandemic and ongoing uncertainty and volatility in the economy. 

Supporting the growth of small business is essential for economic stability as it helps to foster innovation and encourage future entrepreneurship and continued business growth. However, with access to funding sometimes challenging and the needs of every business vastly different, brokers need to ensure they are aware of all the financing solutions available to those clients looking to capital raise, particularly those just starting out. 

Exploring Homeowner Business Loans

For example, a homeowner business loan can prove to be an excellent borrowing tool for those clients at the start of their new business journey or even existing business owners in need of a cash injection. Yet despite being an extremely useful way of capital raising, homeowner business loans remain a relatively unfamiliar and niche area of the specialist lending market.

Lenders in the Market Offering Homeowner Business Loans

There are not many lenders in the market offering a homeowner business loan, but Mercantile Trust and Together are two lenders that do. With few lenders offering this, it could mean brokers may not be aware of what they offer.

Maeve Ward, Director of Commercial Operations at Mercantile Trust said:

“Our relationship with Clever Lending has been built up over many years, and we have had the pleasure in working with the team more closely since the launch of the product.

“What’s great is that the product allows the client to access funds much more quickly than a second charge mortgage would allow, an advantage when the borrower’s portfolio might not have the required equity or they are faced with the challenge of the first mortgagee not consenting.”

Joanna Elton, Intermediary Relationship Manager – Midlands at Together said:

“For customers who are in need of funds to contribute towards their business, homeowner business loans can be an excellent option. Considering their value to both new and existing businesses, they should be on the radar of all brokers so they can best advise and educate their customers.

“There are currently few lenders in the specialist lending sector who actually provide these loans – and we have built up long-standing working relationship with Clever Lending. Together, we have been able to provide a number of these loans to our customers to help them achieve their property ambitions.”

Considerations for Using Homeowner Business Loans

As highlighted by both Joanna and Maeve, this product can be an important one for brokers to have access to as they provide small business owners, start-ups and entrepreneurs a way of accessing finance by allowing them to release equity from their main residence for business purposes. This can prove particularly useful in the early days if a business has no bricks and mortar to borrow against and needs a cash injection to buy equipment, purchase stock or even secure new premises. In some cases, a homeowner business loan can also be used to pay off outstanding business debt such as a tax bill. 

Provided the client is a homeowner with a first charge mortgage, they can take out a homeowner business loan on their residential property up to 75% loan to value, and use the money to set up or help develop their business further. The loan will run alongside, but separate to, the first charge mortgage and will have its own rate, terms and repayment agreement.

A homeowner business loan can also prove to be particularly useful in cases where a property investor may not have enough equity in their property portfolio, as it enables them to use the equity within their own home for business reasons while also keeping their portfolio untouched and protecting the preferential rate on their first charge mortgage.

As the name suggests, a homeowner business loan can only be used for business purposes, so it important the client is made aware of the fact that they are releasing equity from their main home to fund a business transaction and that the money cannot be used for any other reason. They will also need a clear and achievable exit strategy explaining how the loan will be repaid.

Obviously, a homeowner business loan will not be a suitable option for every client, and it is up to brokers to determine whether this type of financing solution suits the individual needs of their business customers. However, as with all aspects of the specialist financing market, understanding this niche product area and being aware of all the options available in the market, will ensure they are fully equipped to serve the individual needs of each of their clients.