New bank Shawbrook has launched a short-term loan for property investors.
Shawbrook, which launched in October, will be offering short-term loans of between £150,000 and £2.5m for the purchase of residential and semi-commercial investment property, funding up to 65% of the purchase price.
Loans will have a minimum term of three months and a maximum of 12 months.
Loans will be priced at 7.45% above three-month LIBOR, giving a current monthly interest rate of 0.7%.
There will be no early repayment change, and Shawbrook will require seven working days’ notice of redemption, subject to a minimum three-month period. Loans will be distributed through Shawbrook’s accredited brokers.
Stephen Johnson, new business director of Shawbrook Bank, said: “We are targeting the professional property investor with a proven track record looking to take advantage of the buying opportunities that exist in today’s market.”
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Sorry, do not see the point in short term borrowing to effect a purchase unless there is a roll-over into a permanent loan situation.. I have been investing in real estate full time for over 25 years, turning over tens of millions of dollars, using bank loans, but always searched for long term (20 yr) loans, or short term (3 yr) renewable loans; cannot see how a 3 to 12 month loan would be of any real value in the purchase of say, a 5 million dollar property. It is too short a term to even flip a re-hab property. Or, am I missing something!
Bill,
You are right, in that if a term mortgage facility can be put in place in the timeframe required it is of course the best option.
However, there are instances where a short term loan is the only way to complete the transaction quickly and in these circumstances Shawbrook offer extremely competitive terms.