Breaking Down the Different Types of Lending Products Available

The Lending Channel
Date Published:07/11/2023

If you are a property owner or an individual interested in the financial landscape but need help finding the best lending products, you are not alone.  

In today's unpredictable economic landscape, many are left wondering how and where to start navigating the complex world of finances and lending. This guide is designed to help. 

The first and most important step is knowing what lending products are available. Whether you're a first-time homebuyer, a property developer, or a business owner looking to expand, understanding the various lending products that are currently on the market will significantly impact your financial success.   

At The Lending Channel, we've been helping clients navigate the complexities of financial lending since 2010. We help our clients make informed decisions that align with their unique needs and budget. Through this customer-centric approach, we've successfully brokered over a quarter of a billion pounds of lending.  

In this comprehensive guide, we'll explore lending products in more detail to give you all the information you need to get started in your property investment journey.  

You’ll uncover helpful information on secured lending, bridging loans, development finance, and commercial finance to equip you with the knowledge you need to make the right choice when it comes to your own borrowing decisions.   

 

Secured Lending Products  

In property lending, mortgage lending is the most common form of secured lending. 

A mortgage loan allows you to purchase a property without paying the high up-front costs. Instead, you will pay off the loan over several years, often around 10-30 on average.  

The collateral, in this case, is the property. When the borrower can't pay the loan, the house is the payment.  

Secured loans such as this provide security for lenders from losing money. Due to the reduced risk, lenders often offer competitive interest rates.  

Secured lending products are a cornerstone of the lending market, allowing borrowers to access more significant loan amounts with potentially more favourable terms. It allows people from all backgrounds and economic situations to purchase a home.  

 

Understanding Bridging Loans  

Bridging Loans or bridge loans are short-term lending solutions designed to fill the gap while buying a property and selling an existing one.  

These short-term loans are invaluable for property developers looking to secure properties quickly or homeowners needing quick funds for property-related matters.   

Bridging loans are secured against the purchased property or other assets, making them a reliable option for those needing immediate financing.  

If you are eager to buy new property and find that selling your house does not give you the necessary funds that are required, this type of loan may work well for you. However, you will of course still need to meet the criteria of the lender,  

If you need advice on short term financial solutions, The Lending Channel is ready to help. We have experts who can discuss the process and risks of this type of loan, guiding you towards the best solution and available offers for your needs.   

 

Development Finance  

Property development projects often require substantial funding to succeed. As we know, property developers will construct, renovate or convert property and then resell it. But often, the high upfront cost of doing so poses problems for developers. 

This is where development finance can help. 

Development finance is a great option for property developers seeking financial support for construction, renovation, or conversion projects. The loan works on the basis that the developed property in question will cover the repayment of the loan once it is sold or refinanced and rented out.  

This type of lending considers the property's potential value once the project is complete and offers flexible repayment options, making it ideal for developers.  

With our experience in the industry, we can readily assist developers in securing development finance that accelerates their projects and ensures the best possible deals on the market. If that’s you, get in touch! 

 

Commercial Mortgages  

Commercial finance is a loan between a business and a lender. 

Often when a business starts to grow, it needs funds to secure its expansion, and this is where commercial mortgage lending comes into play. It encompasses a range of lending solutions tailored to businesses specific needs, making it a versatile and attractive option for businesses that are eager to grow but lack the funds to do so.  

Commercial mortgages allow the business to acquire commercial property to either occupy themselves or to rent to somebody else. 

Our expert advisors at The Lending Channel work closely with business owners to identify the most suitable commercial finance solutions. Businesses interested in commercial finance may also benefit from asset finance, based on their exact needs and requirements.  

Now we have explored the types of lending products, let's dig deeper into the pros and cons of the products mentioned.  

 

Pros and Cons of Each Lending Product  

It's essential to weigh the advantages and disadvantages of each lending product before deciding. We’ve included a short summary for each to help you sum up the benefits and drawbacks at a glance.  

Secured lending 

Secured lending products, such as mortgage lending, offer lower interest rates with higher borrowing limits but require collateral.  

This type of loan can be risky for the borrower, who might suffer loss when an unexpected financial need arises.   

Bridging loans 

Bridging loans offer speed and flexibility but tend to have higher interest rates because of their short-term nature.  

This loan type can be ideal for those looking for a quick payment solution for a property they want to buy, ensuring they can pay the loan on time.   

Development finance 

Lastly, development finance and commercial finance provide tailored solutions for property developers and businesses, respectively. 

This type of loan can be hard to navigate because of the paperwork and complexities involved. Partnering with a broker like The Lending Channel for your financial journey will lighten your load and help you strategise with your loan application, resulting in less wasted time, tailored applications and better end-results. 

Read further as we share expert advice on how to choose the right lending product. 

people agreeing a loan

Image by Drazen Zigic on Freepik

How to Choose the Right Lending Product for Your Needs  

Choosing the right lending product requires a thoughtful and strategic approach that considers various factors. By following our advice listed below, you can ensure your solution meets your immediate needs and aligns with your long-term goals.   

Here are our top tips for choosing the right product for you.   

Understand Your Financial Goals  

Are you purchasing a property, expanding your business, or embarking on a property development project?  

Reflecting on your financial goals is essential before entering any other mortgage details. By clarifying your objectives, you can narrow down the lending products that are most relevant to your situation.  

Assess Your Circumstances  

Consider factors such as credit score, income, debts, and assets. These elements will be crucial in determining your eligibility for certain lending products and the terms you're likely to be offered.  

We recommend a comprehensive assessment of your current financial circumstances as it is essential in choosing the right lending product. Our team at The Lending Channel will review your financial profile to provide accurate guidance.  

Determine the Loan Amount  

If you're purchasing a property, the loan amount should include the property's price and associated costs, such as legal fees and taxes. This action will help you check how much you are willing to pay.   

The amount you need to borrow is a fundamental factor in selecting a lending product. Different products have varying borrowing limits, and you'll want to ensure that the chosen product covers your financial requirements.   

Our mortgage advisers can help you calculate the optimal loan amount for your needs. You can also visit our site and check out our mortgage calculator to give you an overview of how much you can pay.  

Evaluate Repayment Terms  

Repayment terms dictate how long you'll be paying back the loan and the frequency of payments. More extended periods may result in lower monthly payments but could lead to paying more in interest over the life of the loan.   

Shorter terms typically have higher monthly payments but can result in significant interest savings. Consider your cash flow and financial stability when evaluating repayment terms.   

With the help of The Lending Channel, our experts will provide you with a clear understanding of how different terms impact your overall financial picture.  

Analyse Interest Rates  

At The Lending Channel, we stay updated on the latest interest rate trends and can help you find the most advantageous rates for your circumstances.  

We understand that this is one of the most considered factors in your decision-making, so we will guide you to determine the cost of borrowing over time.   

Define the Loan Purpose  

Defining the loan purpose ensures that the chosen product aligns with your goals. 

For instance, if you're a property developer, development finance is tailored to your needs, offering funding that considers the potential value of the property once developed. 

Commercial finance provides the resources to fuel growth initiatives if you're a business owner.   

Get Guidance from Experienced Advisers  

We understand that every individual or business is unique, and our expertise lies in matching you with the lending product that perfectly aligns with your objectives. We'll take the time to listen to your needs, assess your financial situation, and provide you with a range of tailored options.  

At The Lending Channel, our dedicated team of experienced mortgage advisers is here to guide you through the decision-making process.  

 

Tailored Solutions for Optimal Results  

Once we comprehensively understand your financial goals, circumstances, and preferences, we'll present a selection of lending products that suit your needs. We'll explain the pros and cons of each option, empowering you with the knowledge to make an informed decision.  

Our commitment to excellence ensures you're equipped to choose the lending product that addresses your immediate requirements and sets you on a path to long-term financial success.  

 

Your Partner in Financial Success   

Whether purchasing a property, embarking on a development project, or seeking business expansion, there's a lending solution tailored to your needs.  

Understanding the range of lending products available is pivotal to making well-informed financial decisions.   

At The Lending Channel, our expertise, commitment to excellence, and customer-centric approach set us apart in the UK lending market.  

We're here to help you navigate the complexities of lending, ensuring you secure the optimal solution for your unique circumstances. Feel free to reach out to our team regarding your lending needs and we will be more than happy to offer our no-obligation advice to get you started on the right foot.  

Category Tags Business Finance, Bridge Loans
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