Allica Bank has announced significant enhancements to its residential Automated Valuation Model (AVM) bridging loans, increasing the maximum loan-to-value (LTV) ratio from 70% to 75%. This change allows for larger loans, with the maximum loan size now set at £2 million, providing more flexibility for borrowers in the mortgage market.
What does the increase in LTV mean for the mortgage market?
The increase in LTV to 75% means that borrowers can now secure larger amounts against their properties. This is particularly beneficial for those looking to finance substantial residential bridging projects, as it allows for more capital to be accessed without needing to contribute as much upfront equity.
How does this affect below-market-value purchases?
Allica Bank is also offering below-market-value purchases for up to 90% of the purchase price. This option is attractive for investors seeking to acquire properties at a discount, enabling them to maximise their investment potential while minimising initial cash outlay.
What this means for landlords and investors
For landlords and property investors, the changes by Allica Bank represent a significant opportunity to use greater financing for residential properties. The ability to access loans up to £2 million with a 75% LTV can facilitate larger investments and renovations, enhancing potential returns in a competitive mortgage market. Additionally, the standard provision of title indemnity insurance simplifies the borrowing process, reducing the need for extensive legal work.
Frequently asked questions
What are AVM bridging loans?
AVM bridging loans are short-term loans secured against property, using automated valuation methods to determine property value, allowing for quicker decisions and funding.
How does the arrangement fee change impact commercial mortgages?
Allica Bank has temporarily dropped arrangement fees on commercial mortgages of £750,000 and above until 30 September, aiming to stimulate business growth and attract more borrowers.