At First 4 Bridging we speak to brokers every day of the week, and one thing that’s cropped up a few times in recent months is how the products with the best headline rates aren’t always turning out as planned.
The scenario goes something like this: the broker spends a fair bit of time searching for a bridging loan for his or her client and then finds a lender that is offering a fantastic rate – far better than anything else on the market.
In one or two cases, the great rate might be accompanied by a free valuation, too. Understandably, that’s the one they ultimately plump for and the application goes ahead. And why wouldn’t they proceed on that basis? It makes perfect sense.
Everything then goes swimmingly until, at the last minute, the lender comes back with an offer to lend but not at the promised rate — only a higher one. Alternatively, they might say that they will not be able to accept the loan at all as it doesn’t quite fit in with their preferred borrower profile.
Clearly, this then causes all kinds of problems and sometimes the loan falls through, which can result in the borrower losing out on an opportunity to buy a property or, worse still, missing an important completion deadline with a potential financial hit.
A cynic might argue that certain lenders are simply reeling brokers in with market-leading rates, and then taking their pick of the ‘best’ applications to run with, rejecting the rest. Now while this might be true on occasion, it’s generally not the case.
Often the rates being offered are genuine but what’s harder to relay, as mentioned above, are the borrower preferences lenders have. Some, for example, might require such and such an asset as a security, others may gravitate towards buy-to-let or development loans, others still may prefer to lend only in certain areas of the country.
The challenge is matching the rate with the lender that’s right for this or that applicant. This comes from knowing the lender and their individual quirks and preferences — but for brokers who don’t deal with bridging lenders all the time, that’s not always easy.
Lorenzo Satchell is director of First 4 Bridging