Devon and Cornwall: Very few lenders do non-status lending

Devon and Cornwall: Very few lenders do non-status lending




Daniel Sproull, Director of Devon and Cornwall Securities Limited explains how true non-status lending works….

Daniel Sproull, Director of Devon and Cornwall Securities Limited explains how true non-status lending works.

There are in fact very few lenders doing traditional non-status lending. Devon and Cornwall Securities Limited is a principal lender which has been lending continuously since 1983. Its loans are on a true non-status basis, meaning that it looks only at the value of the property to underwrite the loan. Naturally, these are commercial unregulated loans and, apart from the fact that the company does not lend on development sites or filling stations, the only criteria is that it will not lend more than 65 per cent of a 90 day value of a property.

We find that we fill a gap which is all too apparent, especially for those who might want access to a traditional bridging loan but cannot be certain they will be able to repay the sum borrowed at the end of the bridge term. Our loans are all on an open-ended basis and interest only. This means that if a borrower continues to pay the interest, he or she can keep the loan for as long as he or she wants. The average life of one of our loans is about two and half years, although we have had people with us for nine or ten years. When we look at a property, we are concerned only with its value. Sure, we may have additional questions and these often arise from the fact that we go to look at every single property on which we lend, wherever it is throughout England and Wales. Two of our directors are solicitors and therefore when we go to look at properties, we are already eyeing them up from a legal perspective. All the legal work is, in effect, done ‘in house’ by our legal firm (albeit that it is a separate entity) and so there are no delays.

There may well be many borrowers who are quite certain they will be able to repay a bridge after three, six, nine or 12 months, for example. The fact is, many people look at their situation through ‘rose-tinted spectacles’ when taking out a bridge and, sad to say, sometimes they will be encouraged in that view by a broker. If the broker does not come up to proof, or (more likely) the borrower’s plans don’t come to fruition, the borrower can find him or herself in a situation where they can’t repay and are faced with substantial extension fees, or default rates of interest. As there is no fixed term to our loans, the borrower can take his time, working closely with his broker, to arrange his finances without the pressure of a fixed date by which he has to repay.

Devon and Cornwall lends on all sorts of different properties. We were recently able to assist a borrower who owned five investment properties in South Wales. He had a deal with a private lender where he was paying a horrendous level of interest. We were able to provide funds to take out the existing lender, thus saving the borrower many thousands of pounds per month. The borrower was so pleased with our assistance that he put a second portfolio to us to assist him in a similar way. We always act quickly and, indeed, all our loan offers are limited so they have to be completed within 28 days. We want to work quickly and efficiently and, in that way, everybody gets what they want, including the borrower and the broker.

Attributed to Daniel Sproull, Director of Devon and Cornwall Securities Limited

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