Loans for buy-to-lets despite poor credit

Pepper Ireland CEO Paul Doddrell said it always intended to expand into commercial lending. Photo: Shane O'Neill Photography.

Donal O'Donovan

Pepper Money is entering the commercial property and buy-to-let markets for the first time, offering loans of up to €7.5m including to borrowers who missed repayments to other lenders after the crash.

The group will today launch a new commercial property arm, with loans from €250,000 up to €7.5m for investors in properties for industrial, commercial, leisure sector, nursing home and buy-to-let use.

Unlike most banks, Pepper will lend to borrowers who have historic credit issues, as long as they are up to date for the past 18 months on loan payments.

"We'll do our own due diligence on borrowers and properties, and we will lend to a borrower who has come through a period of turbulence with their lender but is now out the other side," Ian Wigglesworth, head of Commercial Mortgages at Pepper Money said.

Pepper has a target to lend up to €300m in 12 to 18 months in the sector, Ian Wigglesworth said.

The lender is targeting both borrowers looking to refinance loans - such as those held by funds, as well as new property buyers.

Interest rates will start from 5pc, the company said.

Australian-owned lender Pepper Money was the first new lender to enter the residential mortgage market after the crash, offering home loans, initially through brokers and later through direct phone and email channels and brokers.

As with the commercial property sector, it lends to home buyers whose historic credit means they can't get a loan elsewhere as well as borrowers such as the self employed who can struggle to meet banks' lending criteria.

Pepper's lending is funded through securitization, bundling loans together and using them as collateral to borrow on the markets.

"It was always our intention to expand our lending offering to include commercial products and to date we have been successful at attracting customers by offering more choice and competition for all borrowers but especially those with otherwise limited options," said Paul Doddrell, CEO at Pepper Ireland.

Meanwhile, the State-backed Strategic Banking Corporation of Ireland (SBCI) has said that at the end of March 2017 it had written loans totalling €657m for more than 15,000 SMEs, who saved 1.15pc on average market interest rates.

Agriculture accounted for 23pc of all loans, the lender said.