The very nature of bridging is speed and there are a number of factors that can determine how efficiently an application goes through successfully and to ensure the subsequent funds are released quickly. Bridging & Commercial enlisted the help of Jonathan Newman, Chairman of the AOBP and Partner at Brightstone Law LLP, to describe one of these factors - the bridging loan legal process.

The expectation of the borrower is that bridging loan lenders can and do perform quicker and more efficiently than their loan peers. This should be the case. However, there is misconception that the due diligence of bridging loan lenders is less stringent. That is most definitely not the case.

A successful introducer will be able to facilitate drawdown and preâ€'empt legal issues which may arise during the legal process by fully understanding the bridging loan legal process, its requirements and managing the customer’s expectations. 

There are six key understandings which will help the process:

1.       Understand the cost

Some bridging loan lenders will not move without an arrangement fee. Some lenders’ solicitors will only commence work upon receipt of cost or a suitable cost understanding.  Therefore, fully understand the fee structure of the bridging lender that you are working with and the timetables for payments.  Arrange to have funds available for undertakings.  Ensure that the client’s solicitor has funds in hand to carry out searches as appropriate.  The process will not begin until these first stop requirements are met.

2.       Understand the client

         It seems absolutely obvious that all reputable lenders have FSA compliant KYC processes.  The customer’s solicitors will have their own requirements under Law Society rules.  Lender’s solicitors will be looking to verify their client’s ML enquiries and those of the customer’s solicitors.  Make sure your client has suitable and appropriate documentation to hand.

3.       Understand the property

         It is crucial to understand the property being offered as security.  It will be subject to valuation.  The property may have occupiers and the lender will want to know on what basis the occupation exists.   Inevitably requisitions will be raised by solicitors.  Lenders will not progress until it accepts any occupation and is aware of its terms.  If the property has unique or unusual features, find out about them and alert the lender as early as possible in the process.  The lenders can then instruct a valuer and/or lawyer in further due diligence.

          Most introducers have the ability to make on-line searches.  It is important to know at the outset what interests are registered against the property and how they are to be dealt with within the loan application.  Obtaining settlement figures can often be the most critical issue for completion.