Precise restructures entire bridging legal fee scale

Precise Mortgages has announced changes to its entire legal fee scale on bridging loans as part of a move which will significantly benefit its borrowers.

The lender has made the decision to fundamentally change its legal fee structure.

Previously, fees had been based on the purchase price or valuation of the property, which is the market norm, however, the lender has decided to charge the fee based on loan amount.

Alan Cleary, Managing Director of Precise Mortgages, said: “The reason for this change is that in the bridging market it is not uncommon for us to grant a loan which has a very low LTV; for example, a £250,000 loan on a property worth over £1 million.

“This example would have previously had a legal fee of £900 plus VAT but, due to the change, it is now £450 plus VAT. If the customer opts for joint representation, the fee is only £600 plus VAT.”

He added: “For the typical borrower who has a property valued at £400,000 and wants a loan of £250,000, the saving is more modest at £45, but this practice is a much more common sense approach for all borrowers. There are some borrowers who may be worse off – a borrower with a £499,000 purchase price/valuation where the loan is £375,000 would be worse off by £100 – but, as with any scale, it is not perfect.

“I do believe that in the vast bulk of cases the customer will be better off and in all cases this makes for common sense. Loans of less than £100,000 will be £51 worse off but these are few and far between and definitely not an area which we intend to expand volumes in.”

The following tables illustrate Precise’s existing fee scale and its restructured system:

OLD SCALE
Property Value	Separate legal representation fee	Joint legal representation fee
Up to £100,000	£399	£549
£100,001 to £250,000	£449	£599
£250,001 to £500,000	£495	£645
£500,001 to £1,000,000	£650	£800
£1,000,001 to £1,250,000	£900	Contact us
£1,250,001 to £2,000,000	£1,450	Contact us
Greater than £2m	Contact us	Contact us
NEW SCALE
Loan Size	Separate legal representation fee	Joint legal representation fee
Up to £250,000	£450	£600
£250,001 to £500,000	£600	£750
£500,001 to £750,000	£750	£900
£750,001 to £1,000,000	£900	£1,050
£1,000,001 to £1,500,000	£1,150	£1,300
£1,500,001 to £2,000,000	£1,400	£1,550
£2,000,000+	Contact us	Contact us

The most significant difference is for loans in the £1-2 million bracket, which under the new fee scale are significantly cheaper. According to the changes, one can see that a £2 million loan has a legal fee of just £1,400. This is cheaper than most mainstream lenders let alone bridging lenders, and for joint representation it is £1,550.

Alan concluded: “I would estimate that this will save these borrowers thousands of pounds each and I believe so far as I can tell that we have the most competitive legal fees in the bridging market.”