Selina Finance is doubling its maximum loan term to 10 years.
The digital lender offers ‘flexi-loans’ up to £1 million by allowing business owners to borrow against the equity locked up in a home or investment property. The lender has also announced changes to its property investor product to help investors release equity from portfolio properties.
Until now, the credit facility, which works like an overdraft, had a maximum term of five years. With the flexible structure, borrowers can draw funds as and when required, and only pay interest on funds outstanding. Extending the term to 10 years will boost affordability by lowering the monthly repayments for business owners.
The enhanced 10-year offering will operate as a ‘flexi-loan’ within the first five years, after which it reverts onto a full repayment schedule for the remainder of the term. Selina has also added a five-year fixed rate option to give borrowers the certainty of a fixed rate over the ‘flexi-loan’ term.
Selina Finance’s offering is feeless, with no setup, early repayment, or valuation fees. Rates start from 4.95%, much lower than rates typically charged on unsecured loans.
The lender has also announced changes to its property investor product, which works as a revolving credit facility for portfolio landlords: they will now lend up to 75% loan to value (LTV) against multiple properties held by an SPV or individual applicant. This follows the ‘Stamp Duty holiday’ announced by the Chancellor in July, effectively reducing the tax payable on new purchases by up to £15,000 for property investors.
Alongside the product launches Selina Finance has enhanced its underwriting and valuations by moving to a cash-flow based underwriting methodology which assesses affordability based on business circumstances. Their proprietary automated valuation model (AVM) has also been upgraded which removes the need for physical valuations. The algorithm analyses various data sources to value a property including size, type, comparable sold values, and location-specific factors such as market liquidity.
Andrea Olivari, co-founder of Selina Finance, said: “We pride ourselves on offering credit that is both flexible and affordable, enabling borrowers to easily unlock the value tied up in their property. Part of our vision is to make business lending as affordable as a mortgage with the flexibility of an overdraft, and these improvements to our product offering bring us one step closer to that.”