Choose your lending partners carefully
By Damien Druce -
Bridging has continued to provide short term lending solutions through good and bad times and has proved to be a much needed and hugely valuable resource for intermediaries and their clients.
Today, the number of bridging or short term lenders is growing to meet the demand for short term finance. However, choosing the right one to work with, can be a lottery and it is vital that brokers shop around.
With new lenders lining up to get a piece of your short term lending pie, one of the usual gimmicks being employed in an increasingly competitive sector, is the ‘cheapest rate’ line.
There are plenty of cheap rates offered as bait to draw in enquiries. But many cases end up not qualifying on presentation, as they rarely ‘fit’ what tends to be an unseen or hidden underwriting requirement.
By the time, this is communicated, brokers are many times not in a position to turn down a new offer at a higher rate and go elsewhere.
This sleight of hand might be a legitimate marketing ploy, however, it is worth remembering the old adage that if something looks too good to be true, it probably is.
The same goes for the myth of instant funding. The truth is that reported bridging lending times are rarely what they are cracked up to be.
We are finding more often that clients and their brokers, who went for a best rate bridging solution then also found that the process was not as fast as they were led to believe, which is why we are seeing more cases coming to us.
They like the fact that at Black & White we don’t offer false promises or ludicrous claims on completion times, just a commitment to structuring the deal correctly, getting it done to the borrower’s satisfaction in an agreed timescale and at a reasonable rate.
Intermediaries need to consider what is important to their clients. Is it really out and out speed and/or the lowest rate?
Some will say that both are equally important, but what we must remember is that this is short term finance.
Differences in interest rates being charged, when applied across the term of a bridging loan, are marginal at best when the loan term in most cases is eighteen months or less.
As for speed, the time and energy invested can be completely wasted if the lender is being ‘economical with the truth’ about how long the case will really take to complete.
When describing the best kind of lender to go with, I like to remember the fable of the race between the tortoise and the hare.
In the story, the tortoise triumphed because ‘slow and steady wins the race’. The bridging market is definitely not slow but the hype about speed and rate is meaningless in real life situations.
The only real factors to consider are ensuring the job gets done efficiently, economically and on time.
Damien Druce is the Commercial Director at Black & White Bridging. Damien has been involved in specialist lending for over fifteen years, he is passionate about intermediaries and the value they add for lenders. Damien is keen on transparency and driving standards so that borrowers get the best outcome every time.