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Peer2Peer Finance News | October 21, 2017

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LendInvest launches alternative to BTL loans

LendInvest launches alternative to BTL loans
Anna Brunetti

LENDINVEST has launched a three-year bridging loan product, marking the third upgrade to its borrower range this year.

The new funding product will target experienced borrowers looking for alternatives to conventional buy-to-let (BTL) loans, either to raise capital or acquire a lower-yielding property, the online mortgage provider said on Tuesday.

The firm, which is a member of the Peer-to-Peer Finance Association, will offer loans ranging between £100,000 and £2m, with maturities ranging from one to 36 months.

Read more:LendInvest Capital’s fund hits £100m

It will charge borrowers an aggregate annual interest rate of 6.99 per cent, consisting of a 4.99 per cent regular pay rate and deferred two per cent interest.

This is also referred to as negative amortisation, as interest payments are accrued on a loan account, which results in larger payments down the line.

The initial loan-to-value ratio will be capped at 70 per cent, increasing to 75 per cent as interest is deferred and rolled up, the firm said.

The move follows the phasing in of a new tax regime for BTL landlords in April that will greatly reduce their ability to offset their mortgage interest against their rental income, nullifying the level of  tax-deductible interest by 2020.

Read more: Autumn Statement: Property-focused platforms call for tax shake-up

“Following an influx of enquiries from borrowers seeking to purchase or raise additional capital against a low yielding property, we developed this product with this niche audience in mind,” said LendInvest’s chief commercial officer Matthew Tooth.

“The three-year bridge acts as an alternative to a mainstream buy-to-let product, tailoring a traditional bridging loan for a longer term.”

The launch comes after the firm’s introduction of a pre-construction finance product in April and a refurbishment loan offering in February.