Do bridging lenders need to think more about added value?

The industry has already seen lenders dropping rates and raising LTVs to maintain or gain market share in a sector which has seen many new entrants.

Earlier this week, InterBay became the latest entrant into the bridging market and has released a product with rates starting from just 0.44%.

So as rates fall to all-time lows and LTVs begin to rise, how else can bridging lenders look to add value in order to attract business?

Speed and service

Are all bridging lenders offering speed and service as standard?

Michael Dean, principal at Avamore Capital, said that providing additional levels of service was essential to showing differentiation.

But despite nearly all bridging lenders broadcasting this message, the reality could be different.

“We pride ourselves on our ability to deliver and go the extra mile for our customers (and our customer/broker reviews back this up) even going to the extent of helping less experienced developers put together professional teams and even sourcing pre-sales for the customer.

“We don’t have access to wholesale banking lines, meaning we can’t compete with Masthaven etc in the market and have to justify our slightly higher costs by providing excellent customer service and certainty of delivery."

Jonathan Sealey, CEO of Hope Capital, said service and speed had always been key tenets of the bridging industry, but he didn’t feel that speed was added value as any lender not offering this was doing its clients a disservice.

“Similarly, good service should be an integral part of working with a bridging lender. 

“Anyone taking out a bridging loan has the right to know that their case is being looked at on its own merits and that they can speak to an underwriter or key decision maker at any time.

“They also deserve to know that if they are told that a lender will lend, that they actually will if all the information on the application remains the same.”

Jonathan felt that the fact that service and speed were being discussed as ‘added value’ meant some lenders weren’t doing this as standard.

Being flexible

Strong working relationships with solicitors can help bridging lenders stand out

Richard Tugwell, group intermediary relationship director at Together, felt that flexibility was a major factor.

“We offer terms from six to 24 months, typically on loans of between £26,000 and £5m, but will consider other cases depending on the customer’s situation and the value of the property – which may be of non-standard construction – that our customers offer as security.”

Neil Turner of Mint Bridging, added: “We know that clients and brokers come to us because of the ‘added value’ we provide and our key selling point.

“They recognise the benefit of a full service in-house team, including quantity surveyors, legal and underwriting.”

Richard said Together’s expert teams also worked with solicitors, financial advisers and valuers to look at complexities such as the market value of properties and these partnerships helped it to stand out.

Aspen Bridging is a recent entrant into the bridging finance market and Jack Coombs, director, felt that as a lender it needed to find a way to say yes.

“At Aspen Bridging, we are focused on service – taking only three hours (day and night) for credit-searched DIPs, a valuation panel who visit properties in a couple of days and underwriters who meet the borrower and see the site to help find a way.

“In addition, at Aspen we recognise the need to be flexible, such as taking a reassignment of a valuation or relying on insurance and not requesting searches.”

Educating brokers

Teaching brokers that bridging isn’t all about price could help lenders

Michael felt lenders shouldn’t rule out the importance of educating brokers and borrowers that bridging was not just about price.

“Sometimes paying a little bit more is worth the extra cost.

“As someone once said to me: ‘Beware the cheap money that never arrives’, namely, a cheap bridge doesn’t look so cheap when the borrower is in danger of losing their deposit on a purchase when they are let down at the 11^th hour."