February 2018
By Tony Sutton, managing director at Specialist Bridging Finance
The bridging market has made massive strides over the last decade. From what was often seen as the product of last resort before the financial crash, for those of us that traded through the last recession, it was a lifesaver business-wise at a time there were few opportunities within commercial and residential term finance.
Short-term finance, as I prefer to call it, has now become a mainstream product and an invaluable tool for brokers. Competition has increased massively with new lender entrants appearing almost every week, and this has driven down interest rates and improved terms for borrowers. We now have a mature short-term finance market with a multitude of choice for both borrowers and brokers, but for many brokers an archaic method of sourcing products remains.
Short-term finance sourcing
With so many varied products now available, how can a broker ensure a client receives the best one for their unique set of circumstances? How do you ensure you do not fall into the trap of approaching a lender purely based on your relationship with them and nothing else?
Manually underwriting a case with many different lenders can be a time-consuming task when calculating rolled-up interest and contradicts one of the main selling points of short-term finance: speed. I have seen a couple of the sourcing systems try to crack short-term finance market but have not been impressed with anything I have seen to date.
With this in mind, at Specialist Bridging Finance we developed BridgeQuote™, an easy-to-use sourcing system that enables us to compare a large number of lenders within 30 seconds, email a compliant decision in principle PDF document to our introducer or client, detailing all costs and fees, and allows us to retain the evidence of product availability at that moment in time for future reference. It has taken hours off the processing times on some cases and has enabled us to quickly deal with the ‘tyre-kickers’ and concentrate on the ‘buyers’.
Obviously, the rates from scenario that some lenders have makes life slightly difficult at times, but the system does cater for this.
Surveys
Another area where we are seeing an improvement is within survey reports. As any broker in short-term finance will tell you, the dreaded Royal Institution of Chartered Surveyors (RICS) report is one of the most frustrating aspects of our job. The many reasons for this are for another discussion but, thankfully, some lenders are now addressing this issue with technology.
With the huge amounts of property-related data now available to lenders, the likes of Hometrack and Rightmove Automated Valuation Models (AVM) are becoming increasingly popular with some lenders for residential property. For a cost of £20-30, regardless of property value, it takes seconds for an AVM to provide a solution that would take days or even weeks when instructing a surveyor.
This is something we all hope more lenders will incorporate into their business models soon for low LTV cases on standard residential property. After all, speed is essential for short-term finance.