Shawbrook Bank has launched into the regulated bridging market with two new specialist mortgage products.
The RB1 and RB2 are the bank’s first residential products and are available alongside the lender’s existing commercial mortgage offering.
The new products are designed to cater for clients looking to avoid ‘chain breaks’ and/or downsize, with the RB2 also providing the option to carry out light refurbishment works on either the new property, or the existing property, in order to add value before sale.
The loans start from 0.59 per cent per month and can be taken out at a loan to value of up to 70 per cent. Clients can borrow from £50,000 to £2.5m for a maximum term of 12 months and interest is rolled up, repayable upon exit.
In line with Shawbrook’s existing lending methodology, cases are judged on an individual basis and clients will be asked to provide detailed repayment strategies.
The bridging products are available to UK nationals with homes in England and Wales and can be accessed through the Shawbrook’s broker partner network.
Karen Bennett, sales and marketing director for commercial mortgages, stated that although the bridging market is new territory for Shawbrook, the move is part of a natural progression from the short term loan market.
“After extensive research into this sector we wanted to provide a traditional finance solution for chain breaks and those looking to downsize.
“We’re always looking for ways to develop our offering in line with the evolving needs of our clients and brokers and our priority remains firmly focused on ensuring the best customer outcomes.”
In August, the Association of Bridging Professionals warned that advisers who recommend bridging loans could be considered guilty of assisting ‘gaming’ if they do not probe borrowers’ exit strategies.
Ray Cohen, executive committee member of the association and a compliance expert at Jackson Cohen, said while the Financial Conduct Authority’s focus on gaming in the mortgage market has mainly looked at buy-to-let to avoid affordability checks, advisers need to be aware that abusing bridging loans is also on the agenda.