The people of Northern Ireland have been unfairly treated by lenders operating in the short term loan sector.
Try to get a bridging loan, development finance or even business finance has been something of a lottery…Some firms say they will lend, some say they will and then change their mind and a few more have no idea where Northern Ireland even is.
However, here at The Finance Business, we can provide finance to property developers, accountants, brokers and entrepreneurs based in and looking to borrow in Northern Ireland.
We work with a number of privately funded lenders who are actively looking to lend in the province and they are asking us to help propel their message to brokers, accountants, property developers and other similar professional introducers in Northern Ireland.
So what’s the problem with lending in Northern Ireland?
Well distance for a start. The issue that many bridging lenders will face is that lending ‘over the water’ will cause logistical problems.
What if you have to go and visit the property on more than one occasion? What if you have to oversee works? What if you need to meet a valuer or quantity surveyor to go through the finer property details?
All of these things make lending in Northern Ireland difficult for the lender.
Of course, there is no doubt there is appetite from the potential borrowers but the reality is that many lenders still see lending in the 6 counties as a risk.
Affordability will also cause issues as this report from the CML highlighted.
House sales. Bridging lenders will keep a close eye on the housing market and will follow closely any regional trends or variations in house sales. Ultimately, a bridging loan provider will want to ensure that when they lend on any property (or even land) in Northern Ireland, that the security property can be sold in a short space of time.
This is why our belief is that when lenders eventually do lend in the province, they will probably base their lending decision on the 90 day sale value, not the open market value (OMV).
This should give them headroom when (and if) they have to take possession of a property and sell it quickly to redeem their loan. Of course, Northern Ireland house prices will be open to the same troughs and peaks of the mainland market but this will be more closely followed by short term lenders who are looking to protect their asset.
Commercial or Residential?
Again, our belief is that when bridging lenders eventually do decide to lend, they will probably only do so on residential properties. Why? Well commercial bridging and development finance is risky on the mainland so this will be further exacerbated in Northern Ireland where lenders will not be able to immediately jump in a car and view the property.
Retail is almost certainly not an area that lenders will look to get involved in and the same probably goes for leisure…Bars, restaurants, hotels, etc.
Probably not. Whilst the proud ship building city of Belfast will be the number one target for most bridging lenders (straddling as it does County Antrim and County Down), it should be be the sole focus as other counties will also present fantastic opportunities.
County Fermanagh, County Tyrone, County Armagh and County Londonderry will also see mainland bridging lenders looking to lend there and so they should as house prices tend to be the same all over the 6 counties.
Most UK bridging lenders accept bad credit borrowers as most lending is done on the asset, not the individual and we don’t see that changing in Northern Ireland. The fact is that adverse credit is not the issue on lending here, the saleability of the asset or other exit route such as refinancing the bridge, is.
Northern Ireland presents an excellent opportunity for bridging lenders and development finance providers to generate a significant amount of new business. As long as there is a prudent approach to lending and the LTV remains conservative based on a 90 day valuation, there should be fantastic opportunities for both private lenders and institutional funds.