What do you do when you are looking for bridging finance? You’ll instruct a few brokers and see what they come up with. Sounds simple but could be one of the worst things you do!
Why do you ask?
The bridging and development world is very small. For some transactions there are only a few decent lenders. If a lender gets the same enquiry from multiple brokers it can go against you.
The lender may think you are desperate for the money which will concern them, it’s duplicated work for them and as each broker has their own questioning style they may get different facts on the same case which may put them off.
There is nothing wrong with contacting more than one broker but you only want to instruct one.
We’ve recently submitted a case for £2m to one lender who had received exactly the same enquiry from another broker. We had already received terms from that lender and they refused to issue any more until the client made a choice of the broker they wanted to work with.
Do your homework on the broker before you make a choice:
- Do they understand what you need.
- Do they arrange bridging finance daily or is it once a year.
- Do they talk about how the bridge will get repaid.
- If the exit is a remortgage can they arrange the finance as not all brokers do.
- Are they regulated by the Financial Conduct Authority (FCA) . Now the FCA doesn’t cover most types of bridging, however it’s a badge of regulation within the finance sector. A lot of bridging lenders will only deal with brokers who have this registration. If the broker doesn’t, it means they don’t have access to a lot of the market.
- Do they talk about the loan conditions, the legal process, what happens if repayment is late, are your solicitors any good, interest rate calculations, is the term long enough.
I use to be a director of a bridging company so ask questions a lot of brokers may not. We want you to sleep at night and not to be worried about your interest rate going up to 30% tomorrow, because the broker didn’t notice this when they arranged the bridging loan!Tags: Bridging