Raising Finance in the 'credit drought'
Only the high street banks remain as a source of funding, but with tough competition they are able to cherry pick who they lend to and have tough ‘stress tests’ which they apply to applications before agreeing them. Gone are the days when they looked at the overall wealth position of applicants.
In order to benefit from a larger choice of lenders and to maximise success it is highly important that you are able to provide them with the financial information they require and this may be in the form of:
- A reference demonstrating your income or profit level or
- Management accounts of year to date figures and perhaps future projections
A reference certified by your accountant will go a long way with lenders and we are able to provide these to our clients along with helping them to improve their management account figures or produce projected profit or loss or cash flows.
Preparation of mortgage references
With the ever increasing height of the banking hurdles many people and businesses are finding it tougher to get approval from their banks to lend. Even with a large secured asset the banks can still be twitchy.
Given this, the banks are often including unfavourable clauses in the contracts, stinging you with interest rates or asking for higher deposits than previously.
Look out for the small print
Different banks often use their own jargon which can be hard to decipher. Although Accountants for Landlords cannot physically provide you with the funds you need, we can review proposed finance agreements, and translate the terms of the contract into something a bit more meaningful.
More importantly, if you want us to we can discuss the agreement with your bank before you sign to make sure there are no nasty bits hidden in the small print.
What may seem a no-brainer finance agreement may not actually work in your favour for cash flow or tax reliefs. There might even be a better way of raising the finance you need by a restructure of your rental business.