Specialist finance provider Octopus Property has announced the launch of a commercial term loan product as it looks to take market share from UK high street banks and building societies.
The new strategy is solely funded by Octopus Choice, the peer to peer platform launched by Octopus earlier this year. It will provide loans with a term of two to five years, a maximum loan to value of 65% and a fixed cost of 5.5% per annum.
This product will dovetail with the existing bridging product, which is suitable for short-term borrowing requirements or where properties have little or no rental income, Octopus said. In the three years to September 2017, Octopus Property’s commercial team has successfully deployed over £423 mln into bridging finance.
'According to the recent De Montfort Report, in the first half of 2017 over £8.1 bn worth of senior term lending in the UK was undertaken by UK banks and building societies, which is by far the biggest segment of the market,' said Ludo Mackenzie, head of Commercial at Octopus Property. 'With this new product we are confident of appealing to both new and existing borrowers, combining the speed and certainty of a specialist lender with the lower cost of debt traditionally associated with high street lenders.'
Nick Westoby, fund manager at Octopus Property, added: 'This product allows a borrower to raise higher levels of debt and keep more of the rental income, while also enabling them to finance assets with shorter leases, or take an interest payment holiday to cover lease expiries and break options.'
The move follows swiftly on the heels of Octopus' launch of Octopus Property’s latest institutional commercial debt fund, CREDF II, which announced a first close of £115 mln at the beginning of the month.
