I am often asked how a deal can work, or how a deal can complete quicker. As with most things bridging it is not an exact science, but below you will hopefully find a few ideas that will help your next bridging loan go through more smoothly. Some of them will seem silly and obvious, but you would be surprised what we have to deal with…
1 – What are we lending against?
One of the biggest bug bears of the underwriter and indeed that of the salesman is not being able to give an accurate assessment of a potential deal because we don’t know what we are lending against. Whether it is a development deal, FSA regulated bridge, commercial loan or auction purchase, we always need to know what we are lending against from day one. The best advice is to always ask the question: “If a surveyor walked in there today what would they see?” Photos are always a good option as well if the property type or condition is a bit unusual. If the property or site is near to the introducer, can he or she take snaps on a mobile phone and text them to us, or can the borrower do so? Technology is so far advanced these days, especially with the wonderful Google Street View, that there should be no excuse for us not having an accurate description of the asset against which we are lending.
2 – Why are they using bridging finance?
Even with some ultra low rates out there, bridging finance is still very expensive compared to the high street option. Many introducers will site the fact that the High Street are not lending, but we all know that isn’t always the case, and like us, they look at deals usually on a case by case basis. It may be a loan that the High Street will lend, but they will take too long for the deal to go through leaving the client in the lurch. Time, as they say, waits for no man and the fact that bridging is pretty quick means that clients are willing to pay that bit extra in order to make their particular deal work. Without fail though, any lender worth his salt will always ask, why are they using bridging finance?
3 – What is the exit route, and is it viable?
One would have thought it is quite a straight forward question, but you would be surprised at what wild and whacky answers we get! The usual answers are of course sale or refinance, and in those instances that is fine, but we must be sure as an FSA regulated lender, that they can actually obtain that refinance. That of course means delving further into the case and looking at credit history and ability to prove income to satisfy the main mortgage provider’s criteria. Bridging finance is a short-term solution of up to twelve months, and twelve months isn’t that long. Be sure of the exit, and be sure that the exit route is both valid and achievable. The more information we get given upfront to back up the exit the easier it is to sign the exit off early on.
4 – Does the client understand the loan?
Part of our due diligence on every loan is to phone the client up and get them to tell us about the loan and the fees involved to ensure they have understanding. It is of course the introducer’s job to ensure that the client is fully aware of what they are signing up for and what fees and costs are involved. Transparency is a word often used to describe Masthaven, and we believe in it throughout the whole case.
5 – How long will the loan take to complete?
Once the commitment of the valuation fee has been paid, everyone wants to know how quickly the loan will complete. Our stock answer is that from receipt of forms and fees we take between 7-10 working days until drawdown of funds. This is of course an average, as some deals take much longer and some deals take much less time. The undeniable factor in every deal however is that of the role of the client’s solicitor. They are pivotal in the part they play in the loan, and a solicitor experienced in bridging finance is a valuable asset in the holy grail of the speedy completion.