Bridging lender Fincorp has changed its position on fees by offering a 12-month refurbishment loan at 1.25% per month, with a 1% arrangement fee and 1% redemption fee. It is available up to 70% loan to value.
For the last 27 years Fincorp has been a ‘no fees’ bridging lender.
It is also offering to loan up to 70% of the refurbishment costs. The same deal is also available to customers at a flat rate of 1.5% per month with no additional fees. Interest and fees can be paid up front or rolled up into the loan and paid at redemption. Fincorp will not charge interest on any interest until it becomes due.
Clients wishing to finance both heavy and light refurbishment projects for a period up to 12 months are eligible to apply for loan. Brokers can earn a 1% procuration fee on both deals, paid up front by the lender directly on completion of the deal.
The Fincorp Flexible Refurbishment Loan is available immediately and is funded through a £15 million tranche of finance.
Nigel Alexander, director of Fincorp, said: “This is about putting the power back in the customer’s hands – we want to offer them the choice to spread their costs evenly across the period of the loan without the cost of an up-front arrangement fee. But we also want to do business with clients who want the flexibility of a lower monthly rate and the option to pay fees.
“We wanted to change that status quo. After listening to our intermediary partners’ feedback, we concluded that our commitment to being clear and simple about our charging didn’t mean we couldn’t offer borrowers flexibility.
“The bridging market has changed a lot in the past seven years and this move demonstrates we aren’t afraid to change with it, where that is in the best interests of our clients.”
Alexander said that the lender’s decision to break with its long-held ‘no fees’ stance was undoubtedly the result of increasing competition in the bridging market where headline rates have been dropping steadily for the past two to three years.
He added: “Giving customers a choice about how to pay for their loans is the absolute standard in the mainstream residential mortgage market – and in the buy-to-let space. Our decision to offer our clients that same choice in the bridging market is the next step in the evolution of the bridging market – and we believe it’s a responsible step to take.
“We are keen to roll this approach out on a limited basis initially to test the market’s appetite. If the refurbishment product is successful, we are considering moving to a model that offers the same flexibility on fees to all of our clients on all types of bridging finance in future.”