KIS Finance reaches £1 billion bridging loan milestone
As we entered March this year we were wondering if this would be the month that we hit a huge milestone that we have had in our sights for the last few months.
That was to hit the £1 billion mark in arranged bridging loans.
On the last day of the month, a busy day for completions being a Friday, we succeeded in doing just that – we completed over £1 billion gross of bridging loans (this figure includes rolled up interest, fees, and renewed facilities that we arranged).
With all our business generated by our ourselves and with no reliance on introducers, this represented an amazing success for KIS Finance and the culmination of nearly 14 years in the bridging sector.
How we started out
We were a team of 3, and in our previous lives we had focused on secured loans and sub-prime mortgages as part of a much larger business. Unfortunately, as a result of the credit crunch the market for these products was effectively dead at that time.
Many of our old customers came to back to us looking for various types of finance, but very few we could help. However, these customers, together with providing marketing consultancy to some local businesses, help to keep the wolf from the door.
At this time, we had been arranging mortgages and loans for twelve years, but until now we had always been a local business and met with all our clients.
It was now time for a complete rethink, which in 2009 led to us setting up KIS Finance (Keeping it Simple) an internet-based brokerage covering the whole of the UK.
The inspiration for our name was the fact that finance is complicated enough at the best of times, and our mission was to keep things as simple as possible for our customers.
The finance market was still suffering, so we were very much dipping our toe in to test the conditions, so we launched websites aimed at secured loans, commercial mortgages, asset finance, buy to lets, bridging loans and development finance.
We received enquiries from all of the websites, but finding the clients the finance that they required was still very difficult to impossible, with the exception of bridging!
Bridging loans could be placed and completed reasonably quickly, so we turned our attention to bridging finance and KIS Finance was born.
The three of us were relatively new to the bridging market, having previously only ever brokered about 2 bridging cases.
Prior to the credit crunch there had been little demand for bridging finance when mortgages and loans were easy to come by and the high street banks were happy providing bridging to help clients buy before selling a property.
Growth of the bridging market
But now the bridging market was starting to take off, albeit in small volumes, often funded by private offices.
Wealthy people with cash sitting in the bank were earning virtually nothing in the way of interest, with the base rate falling to 0.5% in 2009. However, some saw lending into the bridging market as a good way to get a better return on their investment.
With clients looking to buy unmortgageable properties to renovate and sell on for a profit, the bridging market was starting to grow.
With tightened regulations on mortgage lending criteria the housing market was hit, and many builders found themselves out of work. However, some turned to bridging loans to purchase run down properties and basically employ themselves to renovate them and sell on for a profit.
Initially interest rates on bridging products were high, with 1% per month being seen as a good rate.
This rate of return started to attract more lenders into the market and the resulting competition led to bridging rates gradually reducing. Some lenders got it wrong, entering and leaving the market quickly.
Amicus was a prime example of a large lender who came into the market aggressively with higher LTVs than other lenders, only to leave shortly afterwards.
As the number of lenders, and the size of lenders grew, the market became more competitive and interest rates continued to drop.
This made bridging a more viable option to many new customers, whereas previously bridging had a reputation for being expensive.
KIS has grown too
As the market has grown, so has the team at KIS Finance. With few people having previous experience of bridging, we have grown and trained our own team, learning together. Those who have joined us have also added their own skills to the team.
Jerry and Lyndsey were already highly experienced finance professionals and have led us to expanding our offering to include mortgages, remortgages, buy to lets, and four years ago we started providing lifetime mortgages.
More recently (last September) we have been joined by James, who has extensive experience in secured loans.
Whilst bridging is still at the core of our business, we now also provide development finance, commercial mortgages, buy to lets, lifetime mortgages, re-mortgages and secured loans.
Our plans for the future
Having hit the £1 billion gross bridging milestone, our next target is to hit £1 billion net (that’s without the inclusion of added interest and fees), which is something we hope to achieve by the end of this year.
Holly is the Managing Director of KIS Bridging Loans, Independent Finance Specialists who like to keep it simple.