Investors can still access competitive finance, says Hertfordshire finance brokerage
The mortgage market has largely been reported to be in a ‘state of chaos’ over the last few weeks, across both personal and specialist markets following the mini-budget when banks pulled hundreds of deals. However, opportunities for property investors are still available.
With a growing number of investors looking to get more bang for their buck by moving into mixed-use and commercial property investment, there are deals to be accessed in spite of rising interest rates and economic uncertainty ahead.
Mark Jones, director of commercial finance brokerage Omega, said: “The Chancellor’s announcement caused a huge reaction from lenders, rates being revised on a daily basis and in some cases deals being pulled completely from the market. While these events certainly took the headlines, investors should be reassured there remain a significant volume of funding options available to support mixed use, commercial and development opportunities.
“Trading businesses can still access very competitive terms, we completed on a 90 per cent loan to purchase just last week for a business buying their existing premises.”
Mark, who has also seen the number of people looking to build their own homes increase more than 1,000 per cent in recent months, says more investors are expanding their portfolios as they recognise the increased yield from premises that include residential accommodation and commercial space.
Omega has seen an 18 per cent rise in the number of investors looking for funds for mixed-use property, including many where this would be their first semi-commercial or solely commercial investment.
Mark said: “Clients are looking to make their money go further and expanding or diversifying their property investment portfolio rather than sticking with vanilla buy-to-lets.
“Not surprisingly, they want to get the best returns from their deposits and investors are making their cash work harder for them. We are seeing more and more people shifting from the traditional investments and looking at property they can either add value to through refurbishment or switching to commercial and mixed-use asset classes.”
He said there was a drop in the number of residential bridging loan deals in the first half of the year, but an increase in value-add projects such as conversions and refurbishments.
Omega has also seen a 1,133 per cent increase in the number of residential development deals since before the pandemic with a rise in the number of people failing to find their dream home choosing to build their own.
“It has definitely been a trend that started during 2020. Terms remain very competitive across the residential development sector, rates have moved significantly within residential investment or buy-to-let but we haven’t as yet seen that same relative increase in development finance.”
He believes the increase in mixed-use and commercial investment deals will be a continuing trend in spite of the general hike in interest rates.
“There are challenges ahead and, without doubt, interest rates and the resulting impact on debt service requirements will certainly be among them.”
“Getting a deal over the line is also taking more time. We continue to work harder for our clients than ever before, not just in providing the most competitive terms from a wider spread of lenders, but also in managing the full mortgage process, liaising with all participants and delivering for our introducers and clients alike.”