"The increase popularity of bridging lenders and appeal of bridging loans comes as no surprise. B"
We at Blend Network have seen a sharp rise in bridge loan requests and last year provided a bridge for a landmark project to part finance the acquisition of a former Victorian shoe factory in Northamptonshire with planning to convert into 24 apartments.
The increase popularity of bridging lenders and appeal of bridging loans comes as no surprise. Bridging lenders are able to offer flexible, fast and tailored lending solutions in what is a highly dynamic property market with many moving parts. They are also often the only option when traditional lenders are unable or unwilling to move fast enough to fund deals that require speedy exchange and completion such as auction purchases. But, there are some key things to know when arranging finance for your clients from a bridging lender. Here, I explain the three things that you, as a property finance advisor, need to know when trying to find a bridging lender that both you and your client can trust to work with over the long-term.
Tailored funding solutions
One size fits all does not apply in the property development finance game. Whether it is a piece of land with planning to build five detached houses, a commercial to residential conversion scheme or a terraced house being converted into an HMO, each property deal needs to be approached as a unique project. The ideal lender needs to be able to put a developer’s hat on and get the scheme. Typically, bridging lenders are used to working with these types of projects that are quirky, not off-the-shelf or in mainstream locations. So, top tip number one is to find a bridging lender who can get its head around what your client is trying to achieve, a bridging lender who is switched on and understands the deal.
Time is money
Time is money in the property game and bridging lenders tend to understand this better than anyone else because bridging lenders tend to be staffed by experts who are or have been actively involved in the market themselves. By definition, bridging loans are required when the buyer needs to move fast, whether because it is an auction purchase or because it is an off-market deal or many other reasons. So, top tip number two is to find a bridging lender who both you and your client can trust to get things done on time. For example, Blend Network issues high-level terms within 24 hours of receiving a loan request and regularly funds auction purchases.
Fees
Fees are a very sticky point in bridging finance because since buyers need to move fast or risk losing the deal, some lenders feel entitled to charge deeply unreasonable fees and expect the borrower to pay if under pressure to get the deal done. At the same time, we always hear that one gets what they pay for — and this could not be truer when it comes to bridging loans. A good bridging lender who provides a seamless customer service, flexibility on payments, tailored lending solutions and speed in unlocking finance is worth its weight in gold. So, top tip number three is to find a bridging lender who strikes the right balance between fee transparency and professionality. I’d personally pay a bit more and save myself headaches than shop the market for the lowest rate and have to deal with loads of pain down the line.
