By Alan Margolis, Head of Bridging, United Trust Bank
At UTB we aim to keep in close contact with our introducers. Our regular broker polls provide us with our broker views on a wide variety of topics ranging from key economic indicators to what they perceive as important in getting business completed.
In connection with the latter, we have reviewed the factors which were of the greatest importance to brokers when choosing a lender. These included certainty of decision and funds, the speed of application, regulatory status and the lender/broker relationship. One might be forgiven for thinking that the issue of lenders’ availability of funds and certainty of decision had receded, given how far bridging finance has moved into the mainstream and gained wider acceptance over the last few years. But having recently seen the results of a broker straw poll carried out by Brightstar Financial MD Robb Jupp, it seems that certainty of decision and funds, by inference, is still very much an issue for brokers and this must be as a result of the sheer number and diversity of firms offering short term loans.
There is no question that the number of firms offering short term finance has exploded since the immediate effects of the ‘Credit Crunch’ began to wane. For the uninitiated broker especially, there can be the temptation to utilise the services of lenders who on the face of it are prepared to go to higher loan to values or ask fewer questions. However, given the concerns highlighted by brokers active in the short term market, how can the broker be certain that a decision to lend means that a lender actually has the funds to support their “decision” to lend?
As a bank, it goes without saying that we have the funds available to lend. And to us, an offer letter is not just a piece of paper produced within minutes of an enquiry or, in other words, a glorified decision in principle; it is – subject to the conditions being fulfilled – a commitment to our customers to lend.
The matter of the certainty of funds also has more relevance in most cases than the ability to spin a loan around in a day. Fewer than 1 in 10 brokers responded that, in their experience, cases were generally completed in under a fortnight and this supports our own experience that cases required to complete a bridging loan in just a couple of days or even hours are few and far between. In the main, what borrowers and brokers need most is the certainty that bridging finance will be available, rather than needing to have the money itself in 24 hours.
For brokers looking to place deals, particularly those on the fringe, I would counsel that they first exhaust all the possible options provided by lenders who are members of the NACFB or ASTL before looking elsewhere.
Bridging finance has come a long way in a relatively short space of time and it is pleasing to be an integral part of a vibrant sector of the mortgage market. However, too many lenders remain either unregulated or have not formally subscribed to the ethos of the ASTL or NACFB and, until such lender firms are very much a minority, we are likely to see brokers continue to rate certainty of decision and funds as key concerns.