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Bridging Loans

Lender Reliability an Increasing Factor for Bridging Loan Brokers

Value for money, an innovative range of products, industry experience – all the kinds of things that count for a lot when selecting a bridging loan provider. Nevertheless, the results of a recent survey would seem to suggest that more brokers than ever before are considering the overall reliability of lenders, when seeking financial products and services for their clients.

Specifically, 60% of brokers in the UK are viewing lender reliability as a crucial consideration.

The survey was carried out by representatives of United Trust Bank (UTB), which quizzed more than 150 brokers across the country regarding their opinions on reliability. When asked directly whether lender stability and reliability was important when placing new business, 60% stated that it was indeed an important factor.

A surprisingly high 36% of brokers said that stability and reliability wasn’t a factor, while 4% said that they were undecided.

Which would seem to suggest that while most brokers are taking an active interest in the reliability of the lenders they work with, more than one in three is doing no such thing. In this sector in particular, the importance of working with reliable and stable lenders is particularly high. Often operating as independent service providers without the established security of a major bank or lender, smaller lenders are naturally more prone to encountering difficulties than their conventional counterparts.

From the perspective of the broker, placing your business with unreliable lenders on the behalf of their clients does little to strengthen their own reputation and stature. From the perspective of the client, these are the kinds of debatable practices that can result in unnecessary delays, complications and difficulties obtaining the funds requested and promised.

“In uncertain times it’s natural that brokers and intermediaries want complete confidence that the lenders they recommend to their clients are going to deliver the funds and the service they’ve promised,” said United Trust Bank group managing director, Harley Kagan.

“Many brokers know from past experience that in challenging markets some lenders may try to change their credit decisions whilst others have difficulty delivering a prompt service or releasing funds on schedule,”

“It only takes one or two examples of a lender changing a deal for that to knock a broker’s confidence in the lender and the customer’s confidence in the broker.”

Common sense would therefore dictate that the only sensible approach is to work exclusively with brokers who prioritise lender stability and reliability accordingly. Which is something that should be made abundantly clear by the broker – particularly if asked directly by the client.

If unsure as to how the broker operates, be sure to ask as many questions as necessary to clarify their approach to lender selection. Should they fall into the alarmingly high 36% bracket that considers reliability to be unimportant, you might want to take your business elsewhere.

Bridging Loans Mortgages

Mortgage Brokers Turn to Bridging Loans As A Quicker Route To Get Clients The Finance They Need

Business and domestic borrowers alike are increasingly turning to independent brokers to access the finances they need with speed and simplicity. In order to cater to this growing demand for dynamic financial products, brokers and financial advisers alike are showing growing preference to bridging lenders and comparable independent service providers.

During the second quarter of 2017, bridging loan activity in United Kingdom peaked at an impressive £150 million. Once a comparatively niche and unexplored area of the mortgage market, bridging finance has seen extraordinary gains over recent years – spiking a full 26% in Q2 compared to the first three months of the year. Which represented the single highest quarterly increase since the launch of the Bridging Trends survey in 2015.

As for the primary motivations of brokers and clients alike for seeking these kinds of services, the vast majority cited the inevitable delays in receiving financial assistance from traditional banks and high street lenders. Particularly when looking to arrange larger loans like mortgages, traditional lenders are increasingly being viewed as inconvenient and unnecessarily complicated access points by the modern consumer.

The most recent Bridging Trends survey found that the most common reason for bridging loan applications during Q2 last year was to fund refurbishments and general improvements. Approximately 27% of all successful applications indicated this particular use for the funds. Delays in traditional mortgage application completions were the second biggest motivator, accounting for 25% of all bridging lending during the period.

Another interesting finding was the way in which in spite of bridging activity as a whole spiking dramatically, borrowers in general sought significantly lower sums of money than in previous quarters. The average loan-to-value (LTV) levels dropped to a new low of 45.4%, which again represents the lowest recorded since 2015. The struggling value of the Sterling and on-going uncertainty regarding Brexit are two of the possible factors contributing to the decline in average loan value.

On the whole however, what’s clear is that the bridging industry in the United Kingdom is looking stronger than ever before, as more lenders and borrowers alike explore the alternatives to conventional mortgages and financial products.

Comparatively low interest rates are also credited with the continuous growth of bridging loan applications across the UK, with average monthly interest rates coming out at 0.84% for the quarter.

“Demand for specialist finance remains strong, notwithstanding a slight increase in the average monthly cost of credit to the consumer,” commented MTF Director Joshua Ask – the group behind the Bridging Trends survey.

“What is interesting however, for the first time since reporting began, mortgage delays are not the most popular use of a bridging finance loan, having been replaced by refurbishment,”

“While it is too early to form any conclusions, this may be indicative of a shift in the market, coming off the back of recent increases in stamp duties, and the changes to tax relief on buy to let property, more investors in this quarter focused on adding value to their existing investment properties.”


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