Fincorp launches first fees or no fees bridging

By Bridging Loan Directory 28th January 2015

Refurbishment loan up to 12 months that “gives customers the choice”

Fincorp has broken with 27 years’ tradition as the market’s only no fees bridging lender to launch a bridging deal that puts the pricing power in the hands of its borrowers.

Today the lender has launched a 12-month refurbishment loan at 1.25 per cent per month up to 70 per cent loan to value, with a 1 per cent arrangement fee and 1 per cent redemption fee. Fincorp is also offering to loan up to 70 per cent of the refurbishment costs. The same deal is also available to customers at a flat rate of 1.5 per cent per month with no additional fees. Interest and fees can be paid up front or rolled up into the loan and paid at redemption. Fincorp will not charge interest on any interest until it becomes due.

Clients wishing to finance both heavy and light refurbishment projects for a period up to 12 months are eligible to apply for loan. And brokers can earn a 1 per cent procuration fee on both deals, paid up front by the lender directly on completion of the deal.

Nigel Alexander, director of Fincorp, said: “This is about putting the power back in the customer’s hands – we want to offer them the choice to spread their costs evenly across the period of the loan without the cost of an up-front arrangement fee. But we also want to do business with clients who want the flexibility of a lower monthly rate and the option to pay fees.”

It is the lender’s belief that until now, borrowers wanting to compare the cost of loans with and without fees have had to look at different lenders with different criteria and with which they may have different strengths of relationship.

“We wanted to change that status quo. After listening to our intermediary partners’ feedback, we concluded that our commitment to being clear and simple about our charging didn’t mean we couldn’t offer borrowers flexibility,” said Alexander. “The bridging market has changed a lot in the past seven years and this move demonstrates we aren’t afraid to change with it, where that is in the best interests of our clients.”

Alexander said that the lender’s decision to break with its long-held “no fees” stance was undoubtedly the result of increasing competition in the bridging market where headline rates have been dropping steadily for the past two to three years.

But he added: “Giving customers a choice about how to pay for their loans is the absolute standard in the mainstream residential mortgage market – and in the buy-to-let space. Our decision to offer our clients that same choice in the bridging market is the next step in the evolution of the bridging market – and we believe it’s a responsible step to take.”

The Fincorp Flexible Refurbishment Loan is available immediately and is funded through a £15 million tranche of finance. Alexander added: “We are keen to roll this approach out on a limited basis initially to test the market’s appetite. If the refurbishment product is successful, we are considering moving to a model that offers the same flexibility on fees to all of our clients on all types of bridging finance in future.”