Bridging applications

Have bridging lenders overcomplicated the application process?



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A number of bridging finance brokers believe that too many bridging lenders have overcomplicated application processes.

Thanks to technological advances and the rise of fintech, a number of bridging lenders have redesigned websites and application processes in an attempt to make it easier for brokers.

However, one specialist finance broker claimed there was a “huge disparity” among the lenders when looking at how complicated their respective application processes were.

Have bridging lenders overcomplicated the application process?

“Many seem to have let ‘process’ take over at the expense of commonsense underwriting,” said Chris Whitney, head of specialist lending at Enness.

“I think part of the problem is that the industry seems to have a shortage of experienced underwriters who are able to make good lending decisions, so lenders lean on process.”

Russell Martin, founder and managing director at Finance 4 Business, said that as the market matured, some lenders had chased cheaper money and, as a result, were governed by their respective funders’ criteria and caveats.

“This creates another layer of process and can become frustrating for both client and broker alike.”

Chris Oatway of LDNfinance, reported a huge disparity among the lenders when looking at how complicated their respective application processes were.

“In general, the lenders that specialise purely in bridging funding tend to have the most streamlined processes as they are specifically ‘set up’ to deal with this type of funding.

“For those lenders that offer a wider range of funding options, the application process tends to be more convoluted and complicated due to the fact that they generally have generic processes to cover all types of lending.”

Zed Lorgat, practice principal at JM Financial, said the issue was that bridging had evolved, in many cases, abnormally and unnecessarily.

“When I hear someone has done a bridge in three or four days, I just laugh to be honest.”

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Could a simplified application process lead to more business being turned down later on?

“I wouldn’t say that a simplified process leads to an application being turned down later,” added Zed.

“More so that a broker or a client seemed to either try to do a half-hearted application and not disclose vital information or, in all fairness, they themselves may not even have been aware that something derogatory or vital existed.”

Jo Breeden, managing director at Crystal Specialist Finance, added that the lender needed to have the right level of detail early in the application to be confident to commit.

“Bridging is typically an equity, not an affordability-based lend, so the key factors are: does it make sense, is the exit realistic and viable, and is the loan in everyone’s best interest?”

Vic Jannels, chairman at All Types of Mortgages, added: “If the introducing broker has done their job properly, [business being turned down later] should not happen other than for a failed valuation.

“The onus has to be on the introducer to fully verify client suitability, and justify the exit route, to avoid later disappointments.”

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What changes would brokers like to see made to bridging application processes?

“I think we have too many lenders very quick to issue terms sheets, but behind that have a laborious process which takes too long and all too often ends up with the terms changing or a decision not to lend,” said Whitney.

“I think we need to remember that the onus is on the borrower and broker to disclose all the material facts in an accurate manner, however, many lender processes are ‘one size fits all’, which doesn’t work well when you are working with diverse clients with unique circumstances.”

Jo added: “Always remember what’s nice and what’s necessary to the application process – focus on what is purely key to that lending decision.

“A bridge and a mortgage are two different products which suit different needs and requirements, and, of course, they are priced accordingly.

“Now price isn’t always the deciding factor, we also want to know the lender can deliver to suit the client’s requirements, including timescale.”

Oatway added that he would like to see a larger panel of specialist surveyors available to reduce the likelihood of delays at a later stage.

“Some lenders work with a highly restricted panel of surveyors who are sometimes not suitable for the property and it can result in serious delays that could jeopardise the transaction further down the line.”

Vic felt a major stumbling block was where the solicitor acting for the client was not well versed in bridging and spends the time telling the client that this may not be a suitable route to follow.

“Perhaps bridging lenders might choose a shortlist for the client to choose from.

“This often leads to a stand-off between the lender and client solicitors slowing the process down.

“It might help if the bridging lender accepted a previous valuation report, particularly in the chain-break situation.”

Liz Syms, CEO at Connect for Intermediaries, felt the legal part of the process was still the most complex part.

“Most bridge lenders will not allow a solicitor to act for both them and the client and, having two solicitors involved – particularly where the clients’ solicitor is less experienced in bridging – often elongates what should be a quick process.

“I would therefore like to see more bridge lenders allowing some form of dual representation.” 

Meanwhile, Zed added: “…We understand that the lawyer has a duty to report to the bridger and must point out certain issues and legalities.

“Bridgers, you’re only in it [for] a maximum of 12-24 months – cut the legal garbage and complexity.

“Do you want to lend the money or do you want to just sit on it and look good, so you have additional cases to brag about in your pipelines pretending to lend the money?”

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1 Comments

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    Richard King

    At Ortus we try and keep the process straightforward. A credit backed AIP is issued within 24 hours, and as soon as the client agrees to proceed we instruct valuation and legals straightaway. Yes, there are forms to complete but for us it makes sense to get solicitors moving as early as possible. We also don't have a 'second tier' of underwriting, or move goalposts as the process unfolds. Most importantly we are able to deliver this service at extremely competitive rates.

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