Hope Capital is to lend to borrowers who have had bankruptcies, IVAs or who have an impaired credit history.
The bridging lender will require there to be a solid exit route to pay the loan back on or before the due date and each loan of this type will need to be repaid with the sale of the property lent against.
Hope Capital says will want to explore the reasons for the bad credit happening in the first place and how it has been overcome. It will want to be sure the cycle of poor credit has been broken and will not continue into future borrowing.
As long as these assurances are received, Hope Capital will accept borrowers with CCJs, a settled bankruptcy, IVA or Company Voluntary Arrangement. It will also review applications from potential borrowers with outstanding or ‘rolling’ arrears.
For a residential purchase, rates will start from 0.69% per month. Hope Capital will lend up to a maximum of 75 % LTV, including to borrowers with under £5,000 of CCJs that have been settled at least 24 months ago. Other LTVs will vary according to severity of impaired credit and whether any CCJs and arrears are current or settled. For borrowers with outstanding mortgage arrears the maximum LTV will be 40%.
For semi-commercial loans rates will start at 0.85% per month. A max LTV of 70% will be available for a borrower with no bankruptcies, IVAs or CVAs and with settled CCJs of less than £5,000, down to 40% for borrowers with rolling arrears.
For commercial property the maximum LTV is 65% with rates from 0.89%.
With this enhanced range of loans, Hope Capital will continue to accept less-regular cases. It will also accept unusual and complicated ownership structures as well as individuals, partnerships and companies.
There will be no credit scoring and each application will be looked at on its own merits with underwriting dependent on a clear and feasible exit strategy to pay the loan back by the due date. The loans will be available across England and Wales for light, moderate and heavy refurbishment as well as for property portfolios and for businesses.
Gary Bailey (pictured), managing director of Hope Capital, said: “We have always looked at every application on its own merits and weighed up each loan individually. Some of the applications we have received in the past have been from people who might have a somewhat tarnished credit history but who have a very strong business case and a clear exit route.
“At low LTVs it makes perfect sense to grant a short-term loan when the case warrants it, with the condition that each loan is paid back with the sale of the property. This is particularly the case when someone has had credit problems in the past but these are now resolved, as long as we understand the reasons for this and we are confident this is not ongoing.
“We have introduced this extended range of bridging loans in order to make bridging available to a whole new segment of the market.”