"Fast Track is not a notional, theoretical concept; it is a process that it being used every day by brokers and their clients to take weeks off typical completion times."
It’s not often in bridging finance that you get the chance to introduce an innovation to your offering which can bring about dramatic improvements, but that’s what we did in the summer with our Fast Track proposition.
First, a bit of background. With the bridging industry reporting increasing completion times across the board – especially with surveys and valuations - and post Covid issues with the legal process still continuing, we decided at Tuscan Capital to see if we could streamline a number of processes while still maintaining the high standards of underwriting and due diligence that we insist upon.
After all, one of the selling points of bridging is speed. For example, an investor wants to secure a property that is available at auction; there’s no other viable option available than bridging. As the deal is largely about the exit strategy, a lender can usually make a decision quite quickly (assuming they don’t have a backlog of applications to wade through!) What is then vital is smooth engagement and communication between lawyers, client, broker and the bridging lender.
That leaves the requirement for a survey and valuation, which can sadly add weeks to the process, which is incredibly frustrating for all concerned when everything else has been deal with so speedily.
All this is why we developed our Fast Track proposition, which use Automated Valuation Models (AVMs) or desktop valuations as an alternative to a full valuation, where Hometrack data supports the client’s estimated value or purchase price. We can rely upon an AVM to 70% LTV for purchases and 60% LTV for refinance up to £750,000 valuation, with a confidence level accepted from 4.5.
In addition, it offers a streamlined legal process where title insurance and search indemnity can be used and credit-approved term sheets can now be issued within four hours of an enquiry. Personal Guarantees, which require all parties to have independent legal advice, are not required on cases at 65% LTV and below.
Meanwhile, an electronic app for satisfying KYC requirements and the use of video technology for the execution of legal documentation further enhance and expedite cases.
Getting results
Put together, these elements that make up Fast Track have cut weeks out of the total time it takes for cases to complete. Our average turnaround time since Fasttrack launched is 41 days, with purchases taking 23 days on average. The fastest deal under Fast Track took just seven working days.
AVM and desktop valuations have proved extremely popular, having been utilised in 35% of all completed cases since July, while loan enquires since Fast Track’s introduction are 26% greater than in the first six months of the year. There’s also the small matter of a 38% increase in conversion rates from Fast Track.
Here’s an example of how Fast Track has worked to help an applicant who was operating with a very tight deadline for the funding of new build flat in North Acton. The borrower, via a UK limited company, needed 70% of the purchase price but had just 10 working days to complete the deal. Using Fast Track, it was secured against a desktop valuation which was turned around in 48 hours, while search indemnity was accepted to avoid delays. Credit-approved term sheets were issued within two hours.
Or take the case of an urgent refinance for a property conversion project in Essex. The applicant originally purchased the property to convert into two flats, but delays with the buy-to-let mortgage meant the current bridging facility was due to expire, which would have resulted in 5% extension fees, despite the fact that all the works had been completed.
A desktop valuation, which was issued on the same day the enquiry was presented, was turned around in 24 hours and the case completed in just nine days from start to finish.
These examples highlight how Fast Track is not a notional, theoretical concept; it is a process that it being used every day by brokers and their clients to take weeks off typical completion times. It can literally make the difference between a client receiving the funds they need to acquire a property or help them out of a tight spot and not. You can see why we’re very pleased with the results from Fast Track and how it is acting as springboard for our lending aspirations in 2023.
