What is invoice/finance factoring? 

Invoice/finance factoring, also known as invoice financing or receivables financing, is a type of financial arrangement in the UK where a business sells its unpaid invoices to a third-party company, known as a factor, at a discount in exchange for immediate cash flow.

Here's how invoice/finance factoring generally works in the UK:

a. Business generates invoices: A business provides goods or services to its customers and generates invoices with payment terms, typically ranging from 30 to 90 days.

b. Business sells invoices: Instead of waiting for the invoices to be paid by the customers, the business can sell the invoices to a factor. The factor typically pays the business a percentage of the total invoice value upfront, known as the "advance rate," which can be typically up to 90% of the invoice value.

c. Factor collects payments: The factor takes over the responsibility of collecting  customers payments. The customers then pay the invoices directly to the factor, according to the original payment terms.

d. Factor provides remaining funds: Once the customers have paid the invoices in full, the factor deducts its fees and charges, which may include a discount fee or service fee, and pays the remaining funds, known as the "rebate," to the business.

Do you need assistance with credit control and reducing the chances of bad debt?

Factoring helps thousands of businesses in the UK turn unpaid invoices into cash through the bank. It is the well-established method of providing finances that directly adds up to the positive turnover.

Key benefits of invoice/finance factoring

Invoice/finance factoring can provide several benefits to businesses in the UK, including instant funds, improved cash flow, assistance with credit control, faster access to working capital, reduced administrative burdens of managing accounts receivable, death penalty appeal, protection against bad debts, and all proceedings are confidential. It is commonly used by small and medium-sized enterprises (SMEs) to bridge the gap between invoice issuance and payment receipt, which can help them manage their cash flow more effectively.

Invoice factoring can be a cost-effective solution for your business

It is important to note that invoice/finance factoring is not a loan, as it involves the sale of invoices rather than borrowing against them. Factors assess the creditworthiness of the business's customers rather than the business itself, making it a viable option for businesses with less-than-perfect credit or limited operating history.

However, as with any financial arrangement, businesses should carefully consider the costs, terms, and conditions of invoice/finance factoring and seek professional advice to determine if it suits their specific needs and financial situation.

Is invoice factoring the most suitable option for you?
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What is money management? 

Money management refers to effectively managing your financial resources, such as income, expenses, savings, investments, and debt, to achieve your financial goals and lead a financially healthy life. It involves making informed decisions about how you earn, spend, save, invest, and borrow money to ensure that your financial resources are utilized wisely and aligned with your financial objectives.

Key principles of money management 

Here are some fundamental principles of money management explained in simple terms:

a. Budgeting: Creating a budget is the foundation of money management. It involves tracking your income and expenses and planning how to allocate your money to cover your essential needs, savings, investments, and discretionary spending. Budgeting helps you understand where your money is going and enables you to make intentional choices about how you use it.

b. Saving and investing: Saving is setting aside a portion of your income for future needs or emergencies, while investing involves putting your money into various types of assets, such as stocks, bonds, or real estate, with the expectation of earning a return. Saving and investing are critical for building wealth over time and achieving long-term financial goals, such as retirement or buying a home.

c. Managing debt: Debt management involves effectively managing any debts you may have, such as credit card debt, student loans, or mortgages. This includes making timely payments, understanding the terms and interest rates associated with your debts, and prioritizing paying off high-interest debts to avoid accumulating unnecessary interest payments.

d. Spending wisely: Spending wisely means making informed decisions about spending your money. It involves differentiating needs and wants, prioritizing essential expenses, avoiding impulse purchases, and comparing prices and options before purchasing. Spending wisely helps you stretch your money further and avoid unnecessary expenses.

e. Emergency fund: An emergency fund is essential to money management. It is a savings account to cover unexpected expenses, such as medical bills, car repairs, or job loss. Having an emergency fund helps you avoid debt when unexpected financial challenges arise.

f. Continuously learning and improving: Money management is a continuous process that requires ongoing learning and improvement. Staying informed about personal finance topics, seeking advice from financial experts, and regularly reviewing and adjusting your budget and financial goals are important aspects of effective money management.

By following these basic principles, you can develop good money management habits to help you achieve your financial goals, build wealth, and lead a financially healthy life. Remember that everyone's financial situation is unique, and it is important to tailor your money management approach to your circumstances and goals.

Our Services 

Help you with money management aspects: budgeting, saving, investing, managing debt, spending wisely and also preparing an emergency fund.

Understand your future personal financial goals through cash flow modelling.

Prepare a plan to help you preserve your financial health.

Build a pension planning strategy for your future.

Friendly advice on your plans.

Identify protection solutions.

Is money management right for me?

Money management is not for you if you are looking for minimum protection and do not want to look at the bigger picture.
But money management is the way to go if you have big plans and want to take control of your finances for a better future.

At CHFinance, we provide money management and advice

If you would like to understand more, feel free to schedule a free call with our financial experts.

What is a mortgage? 

A mortgage is a type of loan that you can take out to buy a property, like a house or an apartment. It's a way for people to borrow money from a bank or a lender to purchase a home and repay it over time, usually with interest added. 

Here is how it generally works:
a. Mortgage Application
You apply for a mortgage with a bank or a lender. They will ask you for information about your income, expenses,  employment, credit history, and the details about the property you want to buy. They use this information to assess your affordability and creditworthiness to determine the loan amount and interest rate they can offer. 
b. Down Payment: If your mortgage application is approved, you must provide a down payment. This is a lump sum of money you contribute towards the property’s purchase price. The down payment size usually depends on the lender’s requirements and the property’s worth, but it is generally around 5% to 20% of the property’s value.  
c. Mortgage Term: You will agree on a mortgage term when you will have to repay the loan. Typical mortgage terms in the UK are 25 years, but they can be shorter or longer depending on your agreement with the lender.
d. Interest Rate: You will also agree on an interest rate, which is the percentage of the loan amount you will pay in addition to the original loan amount. Interest rates can be fixed, meaning they stay the same throughout the mortgage term, or variable, meaning they can change over time.
e. Monthly Payments: You’ll make monthly payments to the lender, typically including the loan principal repayment (the original amount you borrowed) and the interest. These payments continue for the mortgage term until the loan is fully repaid. 
f. Other Costs: In addition to your monthly mortgage payments, you’ll also need to cover other costs related to homeownership, such as property taxes, home insurance, and maintenance expenses.
g. Repayment Options: There are different ways to repay your mortgage. One standard method is a repayment mortgage, where you make regular payments that gradually reduce the loan balance until it has been fully repaid at the end of the mortgage term. Another option is an interest-only mortgage, where you only pay the interest on the loan during the term and then repay the full amount at the end.
h. Additional costs: In addition to the mortgage repayments, borrowers in the UK need to consider other costs associated with buying a property, such as property valuation fees, legal fees, stamp duty (a tax on property transactions), and ongoing costs such as property insurance and maintenance.
i. Risks: It is essential to understand that if you fail to make your mortgage payments as agreed, the lender has the right to take possession of the property and sell it to recover their money. This is known as repossession, which can seriously affect your credit score and financial well-being.

What are the mortgage providers? 

 Mortgage services in the UK are offered by various types of lenders, including banks, building societies, and specialist mortgage lenders. These lenders provide different types of mortgages, such as fixed-rate, variable-rate, and tracker mortgages, with varying interest rates, terms, and eligibility criteria.

Mortgage Types

There are several types of mortgages available in the United Kingdom. Here's a brief explanation of some common types: a. Fixed Rate Mortgage: With a fixed rate mortgage, the interest rate remains unchanged for a set period of time, typically 2, 3, 5, or even ten years. This means your monthly payments remain the same during the fixed rate period, which can provide stability and predictability in budgeting.                                                                      b. Variable Rate Mortgage: With a variable rate mortgage, the interest rate can change over time, usually in line with the Bank of England's base rate or the lender's standard variable rate (SVR). This means your monthly payments can go up or down depending on changes in interest rates.                                                                                 c. Tracker Mortgage: A tracker mortgage is a type of variable rate mortgage where the interest rate is set at a fixed percentage above the Bank of England's base rate for a specified period of time. This means your interest rate and monthly payments will track changes in the base rate, usually with a predetermined "tracker margin" added. d. Discount Mortgage: A discount mortgage offers a reduced interest rate for a set period of time, typically 2 or 3 years, below the lender's standard variable rate (SVR). This means your monthly payments will be lower during the discount period but will likely increase when the discount period ends and the SVR is applied.
e. Offset Mortgage: An offset mortgage allows you to link your mortgage account with your savings or current account. The balance in these accounts is offset against the mortgage balance, reducing the interest you pay. This can help you save on interest payments and potentially pay off your mortgage faster.
f. Interest-Only Mortgage: With an interest-only mortgage, you only pay the interest on the loan during the mortgage term, and the original loan amount remains unchanged. At the end of the term, you'll need to repay the full loan amount, typically through other means, such as selling the property or using investments or savings.
g. Help to Buy Mortgage: The Help to Buy scheme is a government-backed initiative aimed at helping first-time buyers and home movers get on the property ladder. It offers different types of mortgages, including equity loans and shared ownership, which provide additional support in the form of government loans or shared ownership arrangements. 

It is important to note that mortgage products and their terms can vary among lenders, and it is essential to carefully review and understand the specific terms and conditions of any mortgage you're considering. Seeking professional advice from a qualified mortgage advisor can be beneficial in helping you choose the right mortgage for your needs and financial situation.

Remortgaging

Borrowers in the UK may also choose to remortgage, which involves switching from one mortgage lender to another or changing the terms of an existing mortgage. Remortgaging can be done for various reasons, such as obtaining a better interest rate, releasing equity from the property, or consolidating debt.

Government Schemes

The UK government offers several schemes to help first-time buyers and homebuyers with lower incomes, such as Help to Buy, Shared Ownership, and Right to Buy. These schemes provide assistance with down payments, offer favourable interest rates, or allow purchasing a portion of the property and renting the rest.

The regulation for mortgage services in the UK 

It is important to note that mortgage services in the UK are subject to regulations and guidelines set by regulatory bodies such as the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to protect consumers and ensure responsible lending practices. Borrowers are advised to seek professional advice and carefully consider their financial situation before taking out a mortgage.

Get in touch with our mortgage advisor today 

Bespoke financial advice to suit your business needs

In the UK, commercial mortgages are loans to finance commercial property acquisition, development, or improvement for business or investment purposes. Commercial properties include office buildings, retail spaces, industrial properties, hotels, and other income-generating real estate assets.

Banks, building societies, specialized commercial mortgage lenders, and other financial institutions typically provide commercial mortgages in the UK. The eligibility criteria for obtaining a commercial mortgage in the UK may vary depending on the lender but usually involve factors such as the borrower's creditworthiness, business financials, property appraisal, and the purpose of the loan.

Commercial mortgages in the UK often have different terms and conditions than residential ones.

Key features of commercial mortgages

Here are some key features of commercial mortgages in the UK:

Loan Amounts: UK commercial mortgages can range from tens of thousands to millions of pounds, depending on the property value and the borrower's financials.

Loan-to-Value (LTV) Ratio: Lenders typically offer a lower LTV ratio for commercial mortgages than residential ones. LTV ratio is the ratio of the loan amount to the appraised value of the property, and it can typically range from 50% to 75% for commercial mortgages.

Interest Rates: Interest rates for commercial mortgages in the UK are typically higher than residential mortgages, reflecting the increased risk associated with commercial properties. Interest rates can be fixed or variable and may be based on factors such as the lender's base rate, LIBOR, or other benchmark rates, plus a margin.

Repayment Terms: Repayment terms for commercial mortgages in the UK are usually shorter than residential mortgages, typically ranging from 5 to 25 years. Some commercial mortgages may also require balloon payments, where a lump sum payment is due at the end of the term.

Fees and Costs: Commercial mortgages in the UK may have various fees and costs associated with them, including arrangement fees, valuation fees, legal fees, and other charges.

Eligible Borrowers: Commercial mortgages in the UK are typically available to businesses, corporations, partnerships, and individuals with a business purpose for the property. The borrower's creditworthiness, business financials, and experience in commercial real estate may be considered by the lender.

Property Types: Commercial mortgages in the UK can be used for various types of commercial properties, including office buildings, retail spaces, industrial properties, hotels, and others, depending on the lender's policies and criteria.

Commercial mortgages in the UK are commonly used for purchasing commercial properties, refinancing existing commercial loans, renovating or expanding commercial properties, and developing new commercial properties for investment or business purposes.

It is important to note that commercial mortgages can be complex, and borrowers are advised to seek professional advice from qualified financial or legal experts before entering into any commercial mortgage transaction.

Types of finances for commercial mortgage 

Several financing options are available for commercial mortgages in the UK. Here are some common types:

Fixed-Rate Commercial Mortgage: In a fixed-rate commercial mortgage, the interest rate remains constant throughout the loan term. This provides predictable monthly payments and allows borrowers to budget with certainty. Fixed-rate commercial mortgages are suitable for borrowers who prefer stability and want to lock in a specific interest rate for the duration of the loan.

Variable-Rate Commercial Mortgage: In a variable-rate commercial mortgage, the interest rate is subject to change during the loan term based on market conditions. This means that the monthly payments may fluctuate over time, depending on changes in the interest rate. Variable-rate commercial mortgages are suitable for borrowers comfortable with potential interest rate fluctuations and may benefit from lower rates during periods of low-interest rates.

Interest-Only Commercial Mortgage: In an interest-only commercial mortgage, borrowers only pay the interest portion of the loan during a specified period, typically for a few years, after which the loan converts to a principal and interest repayment structure. This type of mortgage may offer lower monthly payments during the interest-only period, but borrowers will need to repay the principal amount later, which can result in higher payments in the future.

Bridging Finance: Bridging finance is a short-term financing option that is commonly used in commercial real estate transactions. It provides temporary financing to bridge the gap between purchasing a property and eventual permanent financing, such as a commercial mortgage. Bridging finance may be used for property acquisition, development, or renovation and typically has higher interest rates and shorter terms than traditional commercial mortgages.

Development Finance: Development finance is specifically designed to finance commercial property development projects, such as construction or redevelopment. It provides funding for the costs associated with land acquisition, construction or renovation, and other development-related expenses. Depending on the project's timeline and requirements, development finance may be structured as a short-term loan or a longer-term commercial mortgage.

Commercial Remortgage: A commercial remortgage involves refinancing an existing commercial mortgage with a new mortgage, usually with different terms or a different lender. This can be done to take advantage of better interest rates, extend or shorten the loan term, release equity from the property, or for other financial reasons.

General steps to obtain a commercial mortgage in the UK

Here is an overview of the general steps involved in obtaining a commercial mortgage in the UK:

a. Assess Your Financing Needs: The first step is determining your financing needs. This includes identifying the type of commercial property you want to finance, determining the loan amount you need, and evaluating your financial capabilities and creditworthiness.

b. Research Lenders and Loan Options: Once you have assessed your financing needs, research different commercial mortgage lenders and loan options available in the UK. This may include banks, building societies, specialized commercial mortgage lenders, and other financial institutions. Compare their loan terms, interest rates, fees, and eligibility criteria to find the best match for your requirements.

c. Prepare Financial Documents: Commercial mortgage lenders typically require extensive financial documentation during the application process. This may include financial statements, business plans, tax returns, bank statements, and other relevant financial documents. Gather and organize all the necessary documentation to submit with your loan application.

d. Submit Loan Application: Complete the loan application provided by your chosen lender and submit it along with the required financial documents. The lender will review your application and may request additional information or clarification during the process.

e. Property Valuation: The lender may conduct a commercial property valuation to assess its current market value and determine the loan amount they are willing to lend. This may involve hiring a professional appraiser to evaluate the property's value.

f. Loan Approval and Offer: If your loan application is approved, the lender will issue a formal loan offer outlining the terms and conditions of the commercial mortgage. Review the offer carefully, including the interest rate, loan term, repayment schedule, fees, and other terms.

g. Legal and Due Diligence: Once you accept the loan offer, the lender may require legal and due diligence processes, such as property surveys, title searches, and other legal checks to ensure the property is free of liens or legal issues.

h. Loan Completion: After completing the legal and due diligence processes, the commercial mortgage will be finalized, and the loan funds will be disbursed to you or directly to the seller or development project, as applicable.

i. Repayment: You will be required to make regular repayments on the commercial mortgage as per the agreed-upon terms, including principal and interest payments, over the loan term.

It is important to note that the commercial mortgage process in the UK may vary depending on the lender, the specific property, and your financial circumstances. Working with a commercial mortgage broker or seeking professional advice can help you navigate the process more effectively.

What are bridging loans? 

Bridging loans, also known as bridge loans or bridging finance, are secured, short-term loans to provide temporary funding for various purposes.

Bridging loans are typically used when there is a temporary shortfall in funds. The borrower needs quick access to capital to "bridge" the gap between two financial events, such as buying a new property before selling an existing one. It is most suitable for landlords and developers. 

What can I use a bridging loan for?

Bridging loans are mainly used for property-related purchases to help get your foot on the ladder, such as:
a. Mortgage payment
You can use a bridging loan to redeem an existing mortgage, allowing you to purchase property even if you are still going through the process of selling your current home.
b. Property development
A bridging loan ensures developers have the finances to begin renovations and get the property back on the market quickly.
c. Self-build
A bridging loan can be used to fund the development of a self-build project.
d. Paying a deposit
If you buy a house at an auction, you must provide the deposit upfront - this is where a bridging loan can help.

Key features of bridging loans in the UK

1. Short-term loan: Bridging loans are usually offered for short durations, ranging from a few weeks to several months, with a typical term of 12-18 months. They are designed to provide temporary financing until a more permanent funding source, such as selling a property or securing a traditional mortgage, can be arranged.
2. Quick approval and funding: Bridging loans are known for their fast approval and funding process. They are often used in time-sensitive situations where speed is crucial, such as property auctions or when a buyer needs to move quickly to secure a property.
3. Higher interest rates: Bridging loans generally have higher interest rates than traditional mortgages or loans due to their short-term nature and higher risk profile. Interest rates can vary depending on the lender, the borrower's creditworthiness, and the loan-to-value (LTV) ratio, the percentage of the property's value that the loan covers.
4. Secured loans: Bridging loans are typically secured loans, meaning they require collateral, such as property or land, as security for the loan. The property used as collateral is often called the "bridge" that provides security to the lender.
5. Flexible use of funds: Bridging loans can be used for various purposes, including property purchases, property renovations or refurbishments, property development, and business purposes. They are versatile and can be customised to suit the borrower's specific needs.
6. Exit strategy: Bridging loans require a clear exit strategy, the plan to repay the loan. This could be through the sale of a property, refinancing with a traditional mortgage, or other means of repayment. Lenders typically require evidence of a viable exit strategy before approving a bridging loan.
7. Fees and costs: In addition to interest rates, bridging loans may also include other fees and costs, such as arrangement fees, valuation fees, legal fees, and exit fees. Borrowers should carefully review and understand all bridging loan costs before proceeding.

Is a bridging loan a good idea?

A bridging loan can help move a house sale along, so you do not need to delay renovation plans or move in. However, it’s important to note that a short-term loan is offered at a higher interest rate. You will need to account for arrangement fees, legal fees and exit fees in some cases, so it’s a good idea to be sure you can confirm the sale beforehand.

It is important to note that bridging loans are considered higher risk and should be used cautiously. Borrowers should carefully assess their financial situation, including their ability to repay the loan and seek professional advice before entering into a bridging loan agreement. It is also essential to work with reputable and authorised lenders regulated by the UK's Financial Conduct Authority (FCA).

Bridging loan vs mortgage

Although both are different types of loans, there is one big difference between mortgages and bridging loans. A bridging loan is often used when you are waiting on the sale of a property to go through to cover costs and ensure no delays. It can help you break the moving house chain, ensure the sale doesn’t fall through, and give you the funds needed to move things along. A bridging loan is a short-term solution, and the debt is paid through the eventual proceeds of your sale. Meanwhile, a mortgage is a longer-term debt, usually repayable over 20 to 30 years.

Am I eligible for a bridging loan?

Some types of bridging loans are offered only when you have a firm idea of when you can repay the money; for example, if you are expecting a property sale within the next month, you can apply with the lender’s understanding that the debt will be repaid within 30 days.

You should think carefully before applying for this kind of loan if you do not have an ‘exit plan’ – as the interest tends to be much higher on a bridging loan and is calculated differently than a typical APR.

What do I need to apply for a bridging loan?

You can get started with your application online. We will ask for a few details to begin your application, including the loan amount you require, personal details and address.

Once these have been received, we will contact you to find out more about your situation. Have the details below to ensure we can proceed with your application.
a. Your name and address
b. Details of the property
c. Details on your income

Applying for a bridging loan

Applying for any loan should not be taken lightly. We’re here to help you every step of the way. Once you apply, we will search hundreds of plans to find a loan that suits your situation. We work with a wide network of responsible lenders to provide the funds you need to secure your new property.

What is the debt restructuring?

Debt restructuring in the UK refers to reorganizing and restructuring existing debt obligations of a company or an individual to alleviate financial distress and improve their ability to repay the debts. Debt restructuring can occur through negotiations between the debtor and creditors or formal legal processes.

Methods of debt restructuring

In the UK, there are several common methods of debt restructuring, including:

Informal negotiation: This involves direct negotiations between the debtor and the creditors to reach an agreement on modified repayment terms. This may include extending the repayment period, reducing interest rates, or lowering the total amount of debt owed.

Debt management plan (DMP): This is an informal arrangement where a debtor works with a credit counselling agency to negotiate with creditors to develop a repayment plan. The debtor makes a monthly payment to the agency, which then distributes the funds to creditors based on the agreed-upon plan.

Individual voluntary arrangement (IVA): This is a formal legal agreement between a debtor and their creditors, facilitated by a licensed insolvency practitioner. It typically involves a proposal for a reduced repayment plan over a fixed period, after which any remaining debts are written off.

Company voluntary arrangement (CVA): This is a formal agreement between a company and its creditors, typically used by financially distressed companies to restructure their debts and continue trading. It requires approval from creditors and may involve reduced repayments, extended repayment periods, or other modifications to the company's debt obligations.

Debt consolidation: This involves combining multiple debts into a single loan with lower interest rates or more favourable repayment terms, making it easier for the debtor to manage their debts and reduce their overall monthly payments.

It is important to note that debt restructuring may have legal and financial implications, and it is recommended to seek professional advice from a qualified insolvency practitioner or financial advisor before proceeding with any debt restructuring process in the UK.