Helping your clients navigate the current environment.

Providing good advice for clients isn’t straightforward at the moment. Opinion polls may have the upcoming General Election as a foregone conclusion, but any election always creates an element of uncertainty in the property market, with buyers often waiting to learn the outcome before committing to a purchase. At the same time, speculation regarding a drop in interest rates later in the year is adding to the current ‘wait and see’ environment.

It’s periods of uncertainty such as this, however, where good advisers really add value to their clients. Homeowners and property investors still have financial arrangements that need attention and, while nobody is keen to tie themselves into longer term deals currently in hope of a lower rate environment in the future, advisers are able to help their clients navigate the short-term challenges.

For example, the slow-moving property market can have a significant impact on developers who need extra time to market and sell their schemes and will often have a time imperative as they approach the end of the term of their development finance facility. In these circumstances, a short-term development exit bridging loan can prove a vital lifeline in helping investors to refinance their development finance onto a lower rate and even raise capital to help them fund the progression of future schemes.

We’re also seeing demand for bridging from portfolio landlords who want to refinance but are reluctant to be tied into a buy to let mortgage at current rates. Often a bridging loan can be exited without penalty after just three months, which provides investors with the flexibility to switch onto longer term funding in the future when they are happy that rates are more attractive.

Another option, for homeowners as well as investors, is to take a tracker mortgage – which may seem expensive at first but will track down should interest rates fall. Trackers also tend to carry fewer exit charges than fixed rates, so this again provides flexibility to switch onto an alternative product in the future.

Immediate uncertainty doesn’t have to stand in the way of good advice. In fact, it’s environments like this where advisers can really add value and help their clients to navigate the near term and build for the future.

Neil Chambers, Senior Associate at Sirius Finance