Accelerating the loans process
In the period of uncertainty post Brexit, due diligence has increased and the time taken to process loans has extended. A strategy is needed to overcome this, according to Brian Rubins, managing director of Alternative Bridging Corporation (Alternative).
The problem was highlighted Rubins says by the increase in the period allowed for completion of auction purchases. “The auction houses recognised that a loosening of the rules was needed if buyers were to be confident to bid. However, even six weeks often is not long enough and bridging loans are often taken until permanent finance arrangements are completed. This use of bridging finance does not just apply to auction purchases but for all property finance transactions including refinance of existing loans.”
To counter the uncertainty Rubins says borrowers and their brokers can take avoiding action through a series of tips:
• Give the lender a break – Provide good information to the lender from day one onwards. Telephone to discuss the proposal in outline with your proposed lenders, establish their interest in the transaction, ensure it fits their criteria and stay in touch;
• Having selected your lender, prepare an information package covering the full story, iei.e. summary of the transaction, its purpose the parties and the properties concerned, the lender’s application form, properly completed;
• Volunteer at the early stage additional data such as the borrower’s CV and proof of income, copy accounts if it is a limited company;
• Unless you have first agreed it with the lender do not instruct a valuer as your choice may not be theirs. If the property is being purchased, a link to the agent’s details will help as will the previous valuation if it is a refinance. For lettings, provide a summary of the terms including names of tenants, rent paid, and expiry date;
• Make sure the borrower has chosen an efficient solicitor, a firm with a few partners or more, who set about obtaining searches and preparing a report on title on day one. When this is left until after a credit decision it delays the drawdown – credit process and legal preparation can happen simultaneously.