Brokers need to diversify in order to secure their futures

Admin | 08:00 Thursday 18th September 2008 | 30

As access to funding lines dwindles, brokers are finding it increasingly difficult to fulfil their job role and stay afloat. Bridging loans is one type of finance that has been less affected by the credit crunch than traditional forms of finance, with some lenders recently extending their funding lines.

Ryneveld van der Horst, Finance Director at Bridgingloans.com explains how bridging finance can be used not only as a versatile loan offering but also as an additional revenue stream – which could help some brokers ride out the credit crunch.

Life is difficult for brokers at the moment. There are currently fewer products on the market as opposed to last year and no-one knows how much worse it’s going to get before things start to pick up. A lot of lenders have repeatedly reined in their loan offerings in recent months and some continue to do so without giving brokers much – or even any – notice.

Brokers can only do their job to their best ability with what is available to them, but as it is the lenders who have the final say on what LTV is available and at what price, some brokers have found themselves stuck between a rock and a hard place. Because of this, and many other reasons created by the squeeze on the market, some brokers have unfortunately found it difficult to stay afloat.

Over 18,000 brokers have worked with us here at Bridgingloans.com and, even in recent months, many have continued to come back to us. They feel secure in the knowledge that they’re not putting themselves in danger – despite the current climate – because of our robust and transparent lending criteria.

One positive move that has come out of the credit crunch is that there are currently around 15 properties available for every potential buyer – so there are plenty of opportunities out there to secure a bargain and cash in on the liquidity crash.

Enterprising individuals and businesses are making hay in the current climate

Even though the market continues to be described as uncertain at best, the predicted rise in repossessions this year actually means that bridging finance offers the ideal characteristics to investors and businesses that have the credentials to snap up a bargain property. At the moment around 60 per cent of bridges on our books are currently property investors looking for funding to increase their portfolio. The availability of bridging loans is enabling individual investors to take hold of some very attractive buying opportunities.

Chances are if your client has to wait around for weeks for the completion of a traditional mortgage then someone who can get the money in just a few days will beat them to it. Being in a position to hand the money over straight away can also help secure a significant discount – of 10 or even 15 per cent. Short-term loans can help property buyers achieve this rapid turn-around and bargain purchase. So why aren’t more brokers offering them?

Some brokers choose to keep bridging loans off their portfolio because they still hold the misconception that there’s no requirement for such a short-tem offering and they are too expensive for the majority of customers. However, bridging finance can be the most cost-effective option and is set to play an important role in the housing market as repossessions continue to increase.

Don’t knock it until you’ve tried it

In a strong financial climate brokers have the luxury of staying in their comfort zone and sticking to what they know. But brokers don’t have that luxury right now and if things continue as they are for the foreseeable future then they’ll need to think outside the box and open their minds up to all the alternatives if they don’t want to be left behind.

Revenues for mortgages are dropping and if they are not replaced brokers could suffer. Many are losing out on a significant revenue stream because they possess limited knowledge about this niche sector. If brokers had a better understanding of where bridging finance can be used, including residential or commercial property purchase, a rapid cash injection for legal purposes or as a much needed credit repair, then they’d have the option of offering it, as a cost-effective option for appropriate customers.

Bridging finance increases the earnings of brokers who have it on their portfolios because of the significant one per cent commitment fee they gain for placing the deal with Bridgingloans.com. Brokers need to be aware that short-term finance is still a very real and viable option for them.

About Bridgingloans.com:

Bridgingloans.com is dedicated to providing quick and easy access to a broad range of resources to give clear and concise information on short-term bridging finance. Its online application process adds to these resources to make life simple for borrowers looking to secure a property.

Bridgingloans.com is an established, independent principal lender providing a competitive and flexible bridging loans service for residential and commercial borrowers. It has a proven track record of providing short-term loan solutions to clients for over 25 years and has an experienced team of dedicated case handlers well placed to provide a tailored solution to each and every case.

Additional information is available at www.bridgingloans.com

Duncan Burford

IBA - PR for BWI

Tel: 01780 721 433

Email: [email protected]

Ryneveld van der Horst

Bridgingloans.com

Tel:0117 9702703

Email: [email protected]

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