Getting a bridging case accepted first time
Jonathan Sealey (pictured), chief executive of Hope Capital
Recent ASTL figures revealed bridging loan applications for Q1 of this year had increased by 13.6% compared to Q4 of 2018 and were up 6.9% year-on-year. At the same time completions had declined by 6.9%.
It certainly gives pause for thought when applications are going through the roof but completions are tumbling. It gives rise to the question, if the value of applications stand at almost £6bn, but completions for the same period are at less than £900m, what is happening to the rest of those applications?
It is clear that either brokers are submitting applications to multiple lenders at the same time, or the applications being submitted just aren’t being accepted and going on to complete. Maybe brokers are submitting the same application to many lenders because their applications to a single lender aren’t being accepted.
This is surely a huge amount of extra work for brokers, to have to submit applications to at least half a dozen different lenders in the hope that one will stick. Surely a different approach would be better?
A broker may think it takes too much time in a busy day to truly understand what each lender will accept but it surely has to save time in the long term?
There are other ways to ensure a case will go through: Really looking at a case at the outset may sound obvious, but every lender knows that it doesn’t always happen. ‘Looking at a case’ means getting under the skin of it. Understanding the borrower and the circumstances surrounding their application as well as just the financials of the case as it first appears. This can include checking all the facts to make sure they are true and sometimes even taking steps to understand a valuation to ensure that it’s accurate.
Sometimes a borrower may have a dubious background which may mean certain lenders won’t accept them. Others may want money for a buy-to-let property that is dressed up as unregulated, but on further investigation turns out to be a regulated loan.
Knowing this at the outset immediately makes clear the type of lender that a loan should be submitted to for best chance of success. Yet other cases may be looking for a certain type of rebridge – knowing whether this is due to borrower over-ambition or genuine problems on a development or refurbishment will also help guide the intelligent broker to the right lender.
While there may be brokers reading this who feel they don’t have time to really investigate a case, especially when they have a heavy work load, I would say, look at the time that the alternative takes.
Any applications submitted to a lender without this level of detail may well result in further questions and requests for further information. If a broker is doing this with the same case several times over, it has to be quicker in the long run, to look at a case in depth at the outset; do some research on the borrower, the case and the lender and then get the case through first time.
Better for the borrower as it will be quicker, better for the lender who doesn’t waste time investigating a case they will never be able to lend upon and better for the broker who achieves the completion, enhances his or her reputation with their client – and gets paid more quickly.