round-table
short of education and short of understanding and they rarely get the full information that’s required in getting the confidence you can work directly with the customer, that’s the real challenge. Kevin: We give the brokers the option. We can speak to the client direct or we can go through them. generally when they’re dealing with us for the first time, they’ll hold onto the client. When they know more about us and trust us, well we haven’t got the time or the energy to try and cross sell clients. We’d be shooting ourselves in the foot. It’s getting that trust across to people and on that first deal it’s very hard. GL: What a broker has to do is make aware the pros of the deal. Does it allow them to do x, y and z? Does it get them to their end goal? And that’s where if you haven’t got the knowledge or understanding as a bridging broker, that’s where you have to rely on, and should
be wanting to get, the specialist distributors to turn around and hold your hand through that process as well as hold the client’s hand. LG: that’s right. the danger with a naïve, uneducated broker doing the bridging product is he tries to prepare the cost structure with a term mortgage and that is totally incorrect. I’ve always championed the view that a bridging cost should be treated as a project cost. It’s the cost of the project, the cost of facilitating or transacting, whatever that may be to get it from A to b. It is not a finance cost like a term lending product is.
When is it appropriate to think about going to a master broker?
Kit: two main scenarios are the chain break situation where they’ve not sold property number one but want to purchase property number two. then where the property needs
work such as no kitchen or no bathroom it’s a prime opportunity for a bridge until the work’s done. the biggest problem at the moment is securing an exit route within a suitable time and that seems to be about six months with most of the high streets. ultimately we’d like to offer a short-term bridging solution and a term solution straight off the back of it as one simple product without having to go to the high street.
Is there any appetite for any lenders to offer the bridge and then a term product as an exit?
AC: We’re looking at it but there are some credit issues. It sounds good but from the lender’s position you have negative selection affecting your credit position. In other words the guy that wants that product is probably the guy that can’t exit easily which means it’s probably an issue somewhere in the collateral or the individual themselves that needs that product. now if I bring that product out, I’m going to want a premium for the guarantee. I’m not going to do that for free, no lender would. So we’re grappling with the numbers to make it palatable to the end customer but also work from a credit perspective. CS: It’s difficult to price for the risk. We’ve looked at the same scenario. AC: If the market starts to demand it, it’s responsible and the pricing looks ok then we’ll eventually come out with something. Kit: the term lender - whether it’s buy-to-let or residential - needs to understand the transaction from the start and if there’s an under market
TIUTA 24 brIDgIng IntroDucer september 2011 The Straight-Talking Bridging Loan Company property solutions
0870 7777205 www. t iutapl c . com
Minimum Loan £30,000 1 Day - 1 Year Term
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