Price, service and certainty — the modern bridging proposition

The bridging market has evolved considerably in recent years. Competition has increased, institutional capital has become more established and borrowers and brokers have more choice than ever when deciding where to place a transaction.

That competition has been good for the market. Pricing has become increasingly competitive and, particularly on larger loans, relatively small differences in rate can have a meaningful impact on the overall cost.

But over and above pricing alone, I think the definition of value in bridging is becoming broader.

For brokers and borrowers alike, the question is increasingly not simply “what rate can I get?” but “what am I getting for that rate, and how confident am I that the lender can deliver?”.

Historically, pricing and service have often been treated as two separate conversations, but a strong lending proposition should be able to offer competitive capital alongside a high level of specialist service.

For a broker, access to the people involved in a transaction matters — as do receiving a clear response, understanding where a case sits and knowing what needs to happen next.

Those elements of service become even more important as a transaction becomes larger or more complex.

In the £1m–10m part of the bridging market, the asset, borrower, structure, business plan and exit can inject significant nuance into the final outcome.

These are the very transactions that benefit from people who understand real estate and are prepared to have a commercial conversation about the deal in front of them.

Commercial thinking doesn’t mean saying yes to everything

‘Being commercial’ is sometimes interpreted as finding a way to approve every transaction — but, in reality, I believe it means understanding the transaction quickly, identifying the important issues early and being clear about what can, and cannot, be achieved.

This means the most valuable conversation a lender can have with a broker is at the beginning of a deal where early identification of any issues with leverage, structure, valuation, the proposed exit or another aspect of the transaction gives everyone an opportunity to address it.

That clarity is just as valuable as speed.

While a fast initial response is useful, a lender actually delivering the facility it has proposed is considerably more important. Ultimately, certainty of execution is the more important measure.

For brokers, there is also their own client relationship to consider.

When they recommend a lender, they are putting part of their reputation behind that recommendation. They therefore need confidence not only in the terms being offered, but in the team and process behind them.

In turn, that means sensible underwriting, clear communication and experienced people working together throughout the transaction.

Today, there is an opportunity to combine the strength and pricing benefits of institutional capital with the accessibility and commercial approach traditionally associated with specialist property lending. I think that combination will become increasingly important as the bridging market continues to mature.

The three pillars of success

The best things come in threes: terms, service, certainty.

This thinking has been central to the recent evolution of our own bridging proposition at Pluto Finance.

We already had a competitive funding proposition. The focus has therefore been on strengthening everything around the capital, and in Pluto Bridging Core we have created a dedicated proposition for £1m–10m loans, supported by a specialist team with greater emphasis on communication, commercial decision-making and certainty of execution.

Borrowers should expect competitive terms; brokers should expect knowledgeable people, clear communication and commercial decisions. Both should expect a lender to deliver on its commitments.

In an increasingly competitive market, the strongest propositions won’t necessarily be defined by one of those things. They'll be defined by the combination.