Brokers criticise upfront fees in bridging

Brokers criticise upfront fees in bridging


Recently, various brokers have spoken to me about their experiences dealing with a small number of bridging lenders that charge clients a large, upfront legal fee on cases before a valuation takes place. 

It transpired that if the deal fell through, or the property was down valued after the fee was taken and the loan amount available was reduced, the client would have to either accept the new terms or lose the money, as the fee would not be refunded.


Although this differs substantially from unregulated firms that attempt to extort money from their clients with no guarantee of lending to them, the fact that these large legal fees are non-refundable, even if the lender changes the terms of the deal, or the amount of finance provided, has been called into question by brokers.


Whilst the majority of bridging lenders do not charge any money upfront, an example of a firm that charges a non-refundable fee is bridging loan company Tiuta, which states on its application form that it has a charge of £850 to cover the legal work their solicitors complete on the case.


Having spoken to a member of the lending team at Tiuta, I was told that clients have the option of paying the valuation fee before the legal fee and if a deal does not go ahead once the fee has been charged it is often because the client or broker has provided inaccurate information on the application form.


Tiuta refused to comment, but some would defend the fee as necessary for when bridging finance is needed in a short timescale and legal and valuation fees can be paid upfront, although it was admitted that this carries a risk for the client.


However, introducers have criticised the use of upfront legal fees by lenders. George Kerr, a broker based in Edinburgh, said: “I would be wary of lenders charging upfront fees in most cases and I think from a client’s perspective, they would run a mile from it. In the current climate, I would be looking to use a reputable bridging lender that didn’t have outrageous upfront fees.”


Would you feel comfortable referring your clients to bridging lenders that charge upfront fees? Send your comments to

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