Anyone who has been involved in the mortgage or loans market for any length of time will know that the likelihood of a 100% smooth process is slim. It’s not that cases don’t progress naturally and end up with a completion all parties are satisfied with, it’s just that there are pretty much always bumps in the road which slow the whole process down, and in some unfortunate cases they will result in the journey being stopped altogether.
The big question at the moment – and one which the conveyancing industry in particular looks to be trying to answer – is what measures can be put in place to stop the unnecessary problems that can often blight a transaction. This is not so much an attempt to try and place the blame on one particular party, but it’s trying to understand how solutions can be found to get rid of the potential obstacles in the road, before they even materialise.
Needless to say, the issue of finance is often one of the most frequently problematic issues that can scupper a transaction and therefore addressing this issue with lenders appears to be a priority. There’s been much talk about pre-approval of mortgage applications before an individual even has the chance to put in an offer – one would presume this is an attempt to try and weed out those who simply don’t have the financial means or approval to progress on a purchase, and yet carry on regardless until the inevitable happens.
Sometimes however, it is through no fault of a client that they are placed in a make or break situation by a lender and have to try and act quickly within a very short space of time, or suffer the consequences. This was certainly what happened when we were recently approached by a broker who had a client let down by the lender, in a case which was incredibly time-sensitive.
On the Monday, the case came through where the client had been let down by the lender at the last minute – it was not going to provide the necessary finance, leaving the client in the situation whereby contracts had already been exchanged and completion was scheduled for the Thursday of that week. You can understand why the broker (and the client) were looking for fast solutions having received this news – in the mainstream world a three-day completion is pitched somewhere in the realms of fantasy so they required specialist expertise and specialist finance.
Having looked at the details of the case as quickly as possible, the obvious solution was a bridging loan and, within the hour, we were able to arrange such a facility for the client with one of the lenders on our panel. What helped was the fact that the valuation had already been carried out, and the lender concerned was happy for us to have the report addressed to them. Within three hours, solicitors had been instructed and both the client’s and lender’s solicitors worked tirelessly over that three-day period to ensure the work was carried out, and I’m pleased to report that the client completed on time on the Thursday.
Now, this might seem something of an extraordinary story – especially when looking at it from the perspective of a predominantly first-charge mortgage adviser – but actually these cases are not uncommon and specialists like ourselves and the lenders we work with are all set-up to work through these within incredibly tight timescales. As an adviser this is important knowledge to have because I’m sure that throughout your career you’ll come across cases with similar circumstances – ones that require flexibility and speed on the part of all.
Being on the front line of these types of cases we know that, when all parties pull together, certainly in the case of bridging loans we’re able to get to the right conclusion and completion within days, sometimes (where the stars align) even quicker. It may not always be possible but it’s certainly an option worth exploring when the stakes are so high for clients who could be on the verge of losing thousands of pounds and the property they were hoping to purchase. We would therefore urge all advisers to have an introducer arrangement with a specialist broker like ourselves – it could be the difference between making that completion or simply adding to the aborted transaction statistics for that year.
Jonathan Caplan is director of First 4 Bridging