Funding 365 appoints new underwriter Bridging finance provider Funding 365 has appointed another experienced underwriter to add to its growing team. George Petrou brings with him 10 years’ experience in the mortgage industry, having previously worked in mortgage and credit underwriting at Zopa, Santander, Capstone Mortgages and Money Partners Loans. Funding 365 Director, Michael Strange comments,“ We are delighted to welcome George to the Funding 365 team. We’re confident that his wealth of experience and superior level of client servicing will enable us to continue providing our market-leading fast and personal service despite our incredible rate of growth.”

Funding 365 added to Bridging Loan Directory Funding 365 has this week become the latest bridging finance provider to join Bridging Loan Directory. Established in 2013 by ex-investment bankers, Funding 365 is the fast-growing lender with integrity who’s shaking up the bridging industry. Valued by its broker partners for its honest, highly-competitive products, friendly service and unparalleled processing speed, Funding 365 provides 3 to 12 month bridging loans secured against residential investment and commercial properties across England and Wales. Interest rates start at just 0.65% per month for residential properties and 0.99% for commercial properties, with no mortgage acceptance fees, exit fees or early repayment fees. Visit www.bridgingloandirectory.co.uk to find out more. Funding 365 Marketing Director, Laura Kendall comments, “Funding 365 had a hugely successful 2015 and we’re confident that the added exposure from Bridging Loan Directory will help us grow our market share even further in 2016. We look forward to developing relationships with even more brokers who believe that getting fair, competitive loans for their bridging clients is their top priority.”

Funding 365 urges SMEs to apply for CBILS before end of March deadline Funding 365 can confirm today that it has received a further increase in its Coronavirus Business Interruption Loan Scheme (CBILS) allocation from the British Business Bank to be able to support more SMEs impacted by Covid-19. The lender is encouraging all remaining CBILS bridging loan applicants to get in touch with them as soon as possible to ensure that eligible loans can be approved by the 31st March deadline. In last week’s Budget announcement, Rishi Sunak confirmed that the scheme is to be replaced in April by the Recovery Loan Scheme, under which interest and fees must be paid by the borrower from the outset. Under CBILS, Funding 365 provides unregulated bridging loans up to £3million for a maximum 65% LTV for up to 18 months, secured on a first charge basis against residential properties across England and Wales. Read the full story here: https://bestadvice.co.uk/funding-365-warns-of-impending-cbils-deadline/

The new bridging lender survival guide As Funding 365 is now approaching its first anniversary it seems an appropriate time to reflect upon the various things that we’ve learnt over the past year. Clearly we have learnt a lot... for example, the world remains big enough for airplanes to vanish without trace; Alex Ferguson is (probably literally) worth his weight in gold; the US Government has access to everything we say and write (although, after watching Enemy of the State in 1998, we already knew that). Whilst all of these things are interesting, our first year in the bridging sector has also taught us some invaluable business lessons. As we are a generous lot at Funding 365, we thought we would put these down to share with other new entrants to the bridging sector (or to any incumbents who may have found themselves suffering from the growing pains that are inevitable when part of a rapidly growing sector). Below is the resulting Funding 365 survival guide for new bridging lenders. 1. Know your competitive strength When making your first steps into the bridging market it’s hard to know exactly what your strengths and weaknesses are compared to the incumbent lenders. In the early days of Funding 365 we had several demoralising conversations with brokers (who shall remain nameless) where they said, “we have 100 lenders, we use about 5 - I don’t think we need another lender”. Needless to say, within six months these same brokers were banging down our door because in actual fact they did need another lender; they needed one who offered super fast execution. It became clear to us from that point forward that the Funding 365 set up (by luck more than by design, quite honestly) allowed us to offer significantly faster execution than that offered by other lenders in the market. This was our competitive advantage and it has allowed us to capture a decent share of the market in our first year. Your organisation may have a competitive advantage in being more aggressive on HMOs, or more attracted to properties in Scotland / Northern Ireland / ex-London & South East, or perhaps you’re happier with commercial property than other lenders. You need to find out what your competitive advantage could be, focus on it, nurture it and market it. 2. Understand your funding constraints and originate accordingly Whilst there are a handful of banks operating in the bridging space, bridging lenders are predominantly privately-funded organisations. Some organisations are funded by a few private individuals, some by accessing family offices and small investment funds and some have been bought out and funded by private equity sponsors. Understanding your funding constraints is the single most important thing that any financial institution should worry about. It’s not just about the quantum of potential funding that you have access to; it’s the quality of the funding and its flexibility that really matters. For example, why did Northern Rock, Bradford & Bingley and HBOS all get into trouble? If your answer is, “they were writing bad mortgages”, you would be wrong, massively wrong (and almost seven years after the start of the crisis, even broadsheet papers (excluding the FT) are still feeding the populace this nonsense). Northern Rock et al. got into trouble because they did not have appropriate focus on their funding sources versus the liabilities they were incurring. To be more specific, they had an over-reliance on the securitisation and covered bond market which, when these markets closed (due to losses arising on US sub-prime mortgage bonds), left them unable to fund their existing commitments to borrowers. The proof that the mortgage quality was pretty good is contained in the fact that the Northern Rock ‘bad bank’ has been profitable ever since it was created (which confounded many journalists who bought into the myth of poor asset quality). In the bridging sector, things are (thankfully) somewhat more straightforward. You need to understand what your funders are happy for you to originate, where they will be flexible and where they will not, and the timescales that you will have to operate under to receive funding. Since Funding 365’s funding is 100% controlled by its management team (who are also the credit committee), we can agree amongst ourselves whether we like a loan or not and therefore make decisions instantly (well, sometimes after a hot cup of coffee and a hotter debate). We do not need to strictly adhere to a matrix of LTVs or live by mantras such as, “we will never bridge a bridge”. Ideally, you should only attempt to originate loans that you know your funders will accept without debate. If your funders delay approval of a particular loan or (as happens all too frequently) refuse to fund it at the last minute, this will sound a death knell for your relationship with the respective introducer and the borrower. Given that this is a small industry, word travels quickly and this failure will soon be known by everyone in the market. 3. Work with brokers who can be a long term partner Our first year of business taught us that there are highly reputable and professional brokers / introducers / packagers (in Funding 365 we call them our ‘Broker Partners’) and those who are purely out for a fast buck and will not be a reliable long term business partner. I like the saying, “you can shear a sheep many times but skin it only once”, which is a mantra that some brokers would do well to learn and live by. How do you develop a relationship with a broker partner? Like finding a wife / girlfriend, I am sure there are many ways to do this. You could throw money at the problem (Russian style) by paying the highest proc fees in the market; you could wine, dine and charm your targets (French style); or you could just market your strengths and try to find a broker who is looking for a lender with this particular strength (let’s call this the match.com approach). Whilst I don’t believe there are any shortcuts to achieving this particular objective, it is a fundamental one. If you don’t garner strong broker partner relationships, you risk finding yourself used as a stalking horse and only able to execute deals that other lenders don’t want to touch. 4. Ensure execution is stellar Having targeted your strengths, lined up your funding and found your broker partners, it’s time to do what you said you could do. For example, if you said that you could operate quickly, ensure that you are able to do so (and not just once or twice; every time). Bridge lending is an industry where high volumes of proposals are received and loans need to be completed efficiently. To ensure that you can execute efficiently you need to have a solid, scalable IT system as well as high quality, trustworthy staff. If you’re a new lender, it’s important therefore to put in the investment into your systems and people upfront - the industry moves too rapidly for you to play catch-up. Ultimately, efficient execution requires focus, dedication, good systems and quality people. If you have all of this in place you should be in a position to back up your words with action. As our friends at Brightstar Financial said to us recently, “it’s nice to see a lender who can walk the walk, not just talk the talk”. Efficient execution builds the bonds of trust and the foundations for repeat business. So, the above, in a nutshell, outlines the four key areas that we believe a new bridge lender needs to get right to survive in this competitive market. The final (unwritten) rule is to try to have a bit of fun - there are plenty of characters in the industry and a lot of interesting stories. Has anyone heard about the lender who tried to repossess a house, only to find that the borrower lived with his pet horse? That’s a story for another time! Mike Strange Director, Funding 365 Limited michael.strange@funding-365.com Read the full article at: https://www.funding-365.com/news

Funding 365 slashes its commercial bridging rates to market leading levels Funding 365 slashes its commercial bridging rates to market leading levels Specialist bridge finance provider Funding 365 has this week announced a dramatic reduction in its interest rates for commercial bridging loans. Funding 365 will now offer commercial bridging loans at a market leading interest rate starting at 0.99% per month. Funding 365 Director, Michael Strange comments,“Funding 365 has built a reputation as being one of the fastest and most flexible bridge loan providers in the market, however, with today’s announcement we can now also be recognized as a low cost loan provider." Funding 365 Director, Mike Strange comments,“We’re excited to be bringing this new product to the bridging market. Funding 365 is well known for its speed of service and low interest rates. Launching this new Short Lease product also demonstrates Funding 365’s flexibility in financing unusual or complicated property transactions.”” Funding 365 Sales Director, Paul Weitzkorn adds,“Funding 365 has always worked with its broker partners to develop bespoke financing solutions for complex and non-standard scenarios. Now, our commitment to lend on short leases and fund lease extension provides borrowers with flexibility in a world where lease extension timing can be uncertain. We look forward to working with our broker partners on delivering this product to their clients.”

Funding 365 increases lending power with securitisation financing Bridging finance provider Funding 365 has this week signed a deal with an established UK bank for a substantial 8-figure securitisation financing facility. The facility has been arranged as a flexible securitisation funding line leveraged against Funding 365’s own capital, which means that all lending decisions remain firmly within Funding 365’s control. Funding 365 Director, Michael Strange comments,“Funding 365 has had an incredibly successful 18 months and all signs point towards exponential growth this year. Signing up this securitisation funding line - where all credit control remains with our directors - allows us to continue providing the professional and speedy service our partners have come to expect from us."

London property - clear and present danger We have previously written a detailed article about the risks that we currently see in the London property market. As an attention grabbing summary, we stated that there is a high chance that the London property market could see a price collapse – and that this collapse could be swift and dramatic. To distill our analysis into a few bullet points, we stated: The London property market is supported by (pre-dominantly) Asian investors (it certainly isn’t supported by the City’s investment bankers any longer!). These investors are pre-dominantly investors who are either (a) looking for a safe home for their funds; (b) speculating in the market because prices are rising; or (c) long term buy to let investors. Buy to let investment in Central London no longer makes any financial sense. In real terms (after inflation) and after taxes and costs, most rental property does not generate a positive return (in other words, the investor is suffering a loss). If interest rates rise: - UK based buy to let investors will almost certainly start to suffer increasing losses on London rental property due to higher mortgage payments. - The exchange rate between Sterling and Asian currencies will start to strengthen meaning that it becomes more expensive for Asian investors to purchase London property so continued high levels of investment are unlikely. The maximum LTV at 0.75%pcm is 60% although higher LTVs will be considered if additional security is provided. Finally, the cherry on the cake, the UK Government is raising taxes on foreign investors (capital gains are now applicable on foreign property owners who dispose of UK property) and potentially on domestic buy to let investors (a mansion tax is still being debated). The problem that we were concerned about is fairly simple – should Asian investors start to pull out of London property and prices begin to fall, will this lead to an avalanche of other Asian investors heading for the exit (they are, to a significant degree, speculators after all)? You do not need to have a PhD in financial economics to understand that a bubble gets inflated slowly, but bursts quickly. The reason for this, as Warren Buffet says, is that confidence is gained one person at a time, but people panic together. I’m also sure that we have all heard the financial adage “don’t panic, but if you are going to panic, panic before anyone else”. Therefore, if you believe that the London property market is supported by foreign investors and speculators, then you should be very concerned about a sign of a slowdown as this could herald the point at which some (savvy) investors decide to offload their entire London property portfolio (and ring the bell to signify the top of the market). Who is going to buy these properties that rent out for a loss when prices are slipping? Answer – no-one, the prices have to fall until the rental return makes sense. Having written the previously mentioned article at the back end of 2013, I thought it would be interesting to see how the fact pattern has changed in mid-2014, and whether we think the tipping point is close. Firstly– how are London property prices faring? Badly, according to many news outlets – “asking prices fall 0.5% in June” according to Savills, while in July a RICS survey found that (by a majority of 10%) their surveyors thought that London prices would fall over the next three months. Secondly– How is Sterling faring against key Asian currencies? Very well (which is bad for London property). The graph below shows how the exchange rate between Sterling and the Chinese Yuan has appreciated steadily from about 9.2 last summer to around 10.6 today. What this means is that it is now about 15% more expensive for a Chinese person to buy a London property than it was a year ago just because of currency appreciation. If you also take into consideration the 16% growth in London house prices during that period (according to Rightmove), it is actually over 30% more expensive. Thirdly– are interest rates going to rise soon? The consensus is now “yes, and sooner than expected”. Interest rate increases this year are now perceived to be highly possible, if not probable. The recent jump in UK inflation to 1.9% has further increased expectation of early rate rises. So, in summary, if you believe that the London property market is supported by foreign investors (the evidence is overwhelming), that some of them will run for the hills when the market turns (the speculators will undoubtedly) and that the current interest rate / exchange rate dynamic will continue to make London less attractive as an investment and bring the tipping point closer – then you, like us, should worry. Mike Strange Director, Funding 365 Limited michael.strange@funding-365.com

Funding 365 completes £8.5m bridging loan in just 3 working days Fast bridging lender Funding 365 has completed an £8.5m bridging loan within 3 working days to save a borrower’s buy to let portfolio from being sold at auction. The borrower needed to re-finance very quickly as their high street lender had appointed an LPA receiver following a dispute and a number of its properties were due to be sold within days. The loan, which was brokered by LINK Capital UK, was supported by security over a portfolio of 16 commercial and residential properties. Known for its ability to execute complicated bridging loans very quickly, Funding 365 previously completed a £6.2m semi-commercial bridging loan within just 1 working day of agreeing terms with the borrower. Funding 365 Managing Director, Mike Strange comments,”We are very pleased that we were able to help the borrower retain ownership of their property portfolio and allow them the time to re-finance with a term mortgage. This is just another example of the quick, tailored service that our broker partners have come to appreciate from us. Credit must equally go to the team at LINK Capital UK and to our solicitors who worked above and beyond to complete this case within such tight time constraints.” LINK Capital UK Managing Director, Theo Kemp comments, “As a professional finance intermediary we are always conscious of those lenders that say they can deliver but can’t as ‘computer says no’ or credit committee declines the case at the nth hour. Funding 365 is unprecedented in its professionalism, speed and integrity - delivering what the customer requires on time and at highly competitive terms - especially in this situation with the borrower being in receivership. Mike Strange and Eddie Boakye worked extremely hard with us and the customer to deliver a complex solution so quickly."

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Funding 365 Delivers £4.75m of Stepped Rate Bridging for Developer Funding 365 has completed two 75% LTV stepped rate bridging loans with a combined value of £4.75 million to refinance 20 newly developed flats in London and Surrey. Both loans were provided at a rate of 0.55% per month for the first 6 months, stepping up to 1.12% for the remaining 6 months - with no exit fees or other catches. First Wealth Management approached Funding 365 on behalf of the experienced property developer. Having completed the conversion of two commercial properties into a range of one and two bed apartments, the client needed to refinance their debts on both projects. The units had proven to be highly desirable, with 7 of the properties already reserved by prospective buyers. Recognising the experience of the developer, the quality of the conversions and the great locations of the apartments, Funding 365’s underwriter moved quickly to craft two bespoke stepped rate bridging loans. They worked closely with all parties to develop part-serviced, part-retained loans with market-leading rates. The result was two highly competitive and transparent solutions that enabled the borrower to sell their properties without taking a big hit to their profit margins. Read the full story here: https://bridgingandcommercial.co.uk/article/18173/funding-365-closes-two-stepped-rate-bridging-deals-worth-%C2%A3475m