Specialist Bridge Lender avoids bumps in the Road to secure bridging finance

Can introducers help reduce or avoid unnecessary delay? Simple question, simple answer – YES!

I’ll start with one observation: whatever is done to help the lender, helps the broker and vice versa.  That’s why you need a Specialist Bridge Lender.  Lending and borrowing require a partnership where the broker can help to both avoid the obstacles and smooth the bumps in the road to secure a bridging loan.

As a grumpy old lender, or perhaps more charitably, one who has seen it all, cooperation between broker and lender is the key to good business. Woe betide the lender who takes the moral high ground and finds “no” easier than working with the introducer to find a way to say “yes”. It is true that a quick no is preferable to a slow one but best of all is finding the solution together.

Now, brokers can choose to just act as a post box, forwarding without reviewing whatever they receive, or they can quicken the process by studying the file first, gathering together the missing information and then sharing it with the lender who now has the data on which to base a swift, positive decision. It will be remembered by the lender and will justify investing time on more complex proposals in the future.

It also cuts both ways; brokers quickly recognise those lenders who are slow to respond, or inconsistent in their assessment or worst of all, change decisions or terms at the eleventh hour for little or no reason. Even if the borrower succumbs and the loan completes, the dirty deed will be remembered!

Of course, in a business such as bridging finance which is geared to speed of decision, it is possible for the unexpected to occur. For example, where there is a down valuation or when on the day of completion the redemption figure on a refinance is far higher than anticipated by either broker or lender. Then, the answer is for the lender to increase the LTV as far as possible and to complete the loan without reducing the advance or changing the terms. This is co-operation which should be acknowledged!

Blockages occur all through the system, slowing down completions, with all lenders experiencing extended drag time. Working from home has exacerbated the problem, with valuation and legal delays being the worst. However, it does not always need to be the case and at Alternative Bridging, we have just completed two bridging loans within less than two working weeks from a standing start. One, is a bridging loan for residential investment at 75% LTV and the second, is a commercial bridging loan at 65% LTV against a roadside development site.

These two examples are not miracles but in the first instance, the result of a well-versed broker who oiled the wheels and made sure all the information was there on day one so that terms could be agreed upon and issued immediately, and then accepted without delay. Our panel valuer responded promptly as did our solicitor, both of whom undertake regular instructions from us and are well versed in our practices.

In the second example, the borrower was an experienced developer, an absolute ‘pro’, who had organised the valuation with one of our panel valuers so that it would be available to us when he agreed on terms with the vendor and fired the starting pistol. Our solicitor worked well with the borrower’s in-house legal team and the loan was completed efficiently and without delay.

We will well remember the broker, the borrowers and our professionals, all of whom were equally responsible for the quick completions.

Because bridging loans have morphed into development finance, it is necessary to add a little expectation management to the mix. Development finance does take longer to process. However, the timescale can be reduced if the borrower and broker provide all the relevant information at outset e.g. a copy of the planning permission and approved plans, the identity of the professional team and contractor, a detailed breakdown of the construction cost and a cashflow forecast. All of this will quicken the process.

Development loans require far more demanding valuations, which include reviewing the feasibility of the project, checking on planning and assessing the build period and, as a result, are rarely delivered in less than four weeks. At that stage, the valuer caveats the report that the final figure for the site value and gross development value is conditional upon the lender’s monitoring surveyor’s report, which looks more critically into the construction cost, programme, pre-commencement conditions and so on.

If these two reports are prepared simultaneously, unnecessary delay can be avoided, but,  unfortunately, the borrower will often wish to wait and see the preliminary results of the valuation before committing to the monitoring surveyor’s expense or even before commencing the legal process.

Similarly, there are many simple loans where the borrower wishes to know the result of the valuation before providing funds for his or her solicitor to give their undertaking for the lender’s legal fees. So, introducers must explain to the client that if the processes are not concurrent, there will be a delay and he or she should not blame the lender or the broker!

There are many ways in which the introducer and lender working together will resolve problems, reduce delays and avoid disappointment. The above examples are just a few pointers which may enable all parties to have fond memories of a bridging loan completed efficiently, swiftly and in harmony.