What processes and checks do you put in place to ensure that risk is mitigated when lending around 80% LTV?
Our business model is very hands-on, one of our experienced underwriters will handle an application from initial enquiry to drawdown and we then maintain an ongoing dialogue with the client until the funds are repaid.
This is not a purely desk-based process, we visit every project we are set to lend on at the same time as the valuer in order to better understand the plan and the client’s needs.
When we offer 80% LTV, it is done with regard to there being a viable exit, which is typically a sale, and we ensure it is against properties where prices are more easily determined and stable over time.
We do not operate with BDMs because we do not want to have that separation between broker and decision maker. Instead, we want to provide certainty and clarity to people from day one to enable us to stand out from the crowd by being upfront.
We have experienced and intelligent people who are well-trained, giving people the right answers to the more complex questions. This means that we can often assist with the problems and issues which sometimes the customer, particularly the less experienced ones, may not have considered for their project.
You launched a finish and exit product earlier this year. What’s the uptake been like on this and are there further products to come?
This year has been a period of strong growth for us, and two factors have played a significant role.
First, the increase in our loan sizes to £4m maximum has driven a positive change in the type of business we are seeing. This has increased our average loan size from £375,000 up to £900,000.
Second is the launch of our finish and exit product. As the name suggests, it means the work on the development is not necessarily completed. The product is available on wind and watertight developments — which is ultimately the time whereby the asset is protected from weather conditions — and we allow drawdowns either on revisit or building control sign-off.
We will also progress with no building surveyor required where works are sufficiently advanced as our underwriters visit the project and can assess themselves.
Demand for this is stronger given the current environment of slower sales, where development lenders are often requiring redemption earlier than developers are able to deliver.
Following the launch of your time-based service excellence targets, have you managed to keep enquiry to completion times within 10 days? If so, how have you done this?
I’m delighted to report the answer is yes, even though we are in the process of doubling our loan book this year and have seen a notable surge in enquiries and illustrations.
When we launched the time-based service excellence targets, we outlined a number of caveats: immediate valuation and legal payment, no building surveyor, property access and quick response times from all parties. Providing these stipulations are met, we still complete over 80% of cases within 10 working days.
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That said we are aiming to revamp our time-based service excellence offering. We currently undertake our illustrations in 15 minutes and our credit-approved DIPs post searches in three hours. We instruct legals and valuations within one hour and we aim to complete our cases in 10 working days.
The combination of our tech-savvy and training-intensive approach makes this possible. It provides our underwriters with the right info and frees them up to help them make quick and sensible decisions on whether an application works or under what conditions we can do it.
It is good, but we’re going to make it better. A new system is in development, which will radically improve our timelines in all of these respects still further.
But, importantly, bridging is never going to be a one-size-fits-all industry, so ultimately, with the best systems in the world, it is really about having exceptional underwriters who can understand a case, overcome problems, see the end result and deliver exactly what the client wants in a timely manner.
What are your biggest concerns for the bridging market this year?
The main issues from our perspective — the combination of higher gearing of the lenders themselves and the potential of a negative economic impact from macro-factors — are most risky when put together.
There are a lot of new players launching currently. Even though we only launched in 2017, we have fast become considered an established bridging lender, largely because people appreciate quality customer service.
All in all, however, more competition is ultimately good for the customers because it means that pricing is keener, and service becomes a key selling point that businesses have to focus on.
But the danger is that the new money that is coming into the market through new entrants and higher debt levels of existing players will be equally as quick to exit the market should the economy experience a downturn.
A lot of these firms are heavily leveraged and the volume of debt that even major bridging players have themselves to third-party organisations is vast. In a downturn, these lenders may exercise their ‘on-demand’ facilities and are, therefore, a higher-risk option for customers and brokers alike.
Having a lender like ourselves financed from a strong equity position, being 100% owned by a very well-established and low-geared PLC, therefore, has major benefits.
We are also a listed company that has responsibilities and have a TCF (treating customers fairly) mentality, which comes through in every transaction.
How did you get into the industry?
I previously worked as a valuer for PwC, then got involved in the S&U PLC group — we sold our home credit division Loans@Home4U in 2015 for £82.5m.
The group generates over £30m per annum and we were looking for a new arm to deploy funds.
We looked in detail at the bridging sector as the Coombs family has over 40 years of experience in property development and the group’s longstanding experience in speciality finance.
Ed Ahrens [managing director at Aspen Bridging] and myself were tasked with looking at acquisitions, but after a long consideration, we determined to build a firm from scratch and commenced hiring and building processes in 2016, with our actual launch in 2017.
Ever since our first bridging loan, I was hooked, and I can honestly say I can’t imagine working in any other business.
If you didn’t work in finance, what would you be doing?
Other than spending more time with my son, I would quite like to be an ancient historian and with my own TV programme. A bit like Dan Snow — but better.