Pepper Money, an Australian lender, will soon begin offering commercial property loans ranging in value from €250,000 to €7.5 million to borrowers in Ireland. It hopes to extend €300 million worth of commercial loans within the next two years, roughly half of what the Strategic Banking Corporation of Ireland has extended at the end of March 2017. These loans will meet the demand of professional buy-to-let borrowers hoping to refinance and the demands by first time buyers for properties with various commercial uses.
Pepper Money has been keen on taking risks in lending and exploring new markets, being the first new lender to enter the Irish Market for residential mortgages after the market crash and financial crisis, offering small home loans through brokers and direct channels. While entering the market for commercial mortgages, Pepper also plans to lend to borrowers with historical credit issues who have had trouble meeting criteria to obtain loans from banks and other lending institutions in Ireland. It will offer loans to borrowers as long as they are up to date for the past 18 months on their payments. Borrowers are likely to include those who are self-employed and those who have faced difficulties making payments after the market crash.
Paul Doddrell, CEO of Pepper Ireland, said that: “It was always [Pepper’s] intention to expand lending offering to include commercial products; and to date, [Pepper] has been successful at attracting customers by offering more choice and competition for all borrowers but especially those with otherwise limited options.”
Pepper’s loans are funded through mortgage securitization, and it is able to lend up to 80% of the price of a commercial property, 10% more than that allowed for banks, which are subject to the Central Bank’s mortgage regulations. Although these new goals raises risk levels for the lender, it’s entrance into the commercial mortgage market (which has traditionally been dominated by the big 3 banks) has been greatly welcomed. Ian Wigglesworth, head of Commercial Mortgages at Pepper Money assured that the company “will do [its] own due diligence on borrowers and properties, and will [only] lend to a borrower who has come through a period of turbulence with their lender but is now out the other side”.