The stamp duty holiday, pent-up demand from the first lockdown and rising property prices have created a perfect storm of a mini-boom under maximum pressure. 

Clients want to complete before the 31st March deadline, but lender processing is understandably struggling under the weight of unexpected demand and remote working pressures.

Realistically, many buyers are now too late to get a purchase over the line with a traditional mortgage, especially those with non-standard income streams.

I know that, you know that — but do your clients?

Maybe not, which is why you need to be prepared to explain the benefits of bridging upfront and consider switching your clients towards a short-term funding solution. 

So, where do you start?

Go back to basics

Recognise that your clients might be wary of committing to a different funding solution to the mortgage they were expecting. And remember, they might not know what a bridging loan is. Go back to basics and explain how short-term funding works, how it differs from a mortgage, and the pros and cons in the current market.

•   B&C interviews Allica's Nick Baker on filling the commercial finance market's gaps
•   Roma Finance cuts rates and increases LTVs across product range
•   Roma launches commercial bridging product range

Highlight the need for speed

If they want to beat the stamp duty deadline, reassure them a bridging loan gives them a better chance of doing this. Explain the current delays in obtaining a mortgage offer and compare that to the has fast a bridging loan can be arranged, especially if they have non-standard circumstances. There are no guarantees, of course, but spell out the impact a swift offer could have on their purchase timescale. 

Do the math

A bridging loan won’t be right for every client in every circumstance. But, by calculating the costs of missing the stamp duty deadline versus the cost of the bridging loan, you can illustrate the potential savings and advise them on whether or not the bridging route is preferable.

Recommend trusted lenders 

If you switch your client to bridging but suggest a lender that lets them down, you could cost them money and lose their repeat business.  

You need to be confident that the case will get over the line with no unwelcome surprises. The best bridging lenders make sure that broker and client understand absolutely everything at the starting gates. This includes the information needed, the fees payable upfront and on completion, and how they plan to keep you updated. Ensure that you’re fully informed not only on the visible pricing and costs to set up the loan, but also potential future charges — for example, if their exit doesn’t come to fruition. 

By removing potential stumbling blocks at the outset, the whole process is quicker and smoother. 

Understand the lenders’ processes and requirements because they are all a little bit different. Be wary of those which are difficult to contact, not giving you all the information you need from the off, or seem out of step with the market on pricing.

Show them the way out

If your client was expecting to purchase a property with a mortgage and you’re now suggesting bridging finance, you need to show them a clear route back to that mortgage. 

Clarify the exit strategy out of the bridging loan, including what happens if they can’t repay at the end of term, as well as if they are able to pay it back early.

Short-term finance isn’t right for everyone, but it could be a smart way for some of your clients to make a significant stamp duty saving.

As their adviser, help them see the benefits of bridging with straightforward, balanced guidance, and weigh up all the costs before advising the right funding model for their needs.