is that there are still lenders promoting non-status bridging lending. there’s no non-status anything in life anymore and I think an inexperienced broker still thinks bridging can be done on a non- status basis. YR: that’s where the emphasis should come for the master broker or the key introducer to that particular lender. You have to establish the facts of the deal and get it all out in the wash from day one. because surprisingly by giving the truth, there could be additional security or additional properties behind the scenes which could add weight and value to that deal and make the lender more comfortable. Kit: that’s something individual brokers haven’t quite grasped yet. You have the whole assets and liabilities scenario to do on commercial deals and bridging deals. because the first thing is,
is there anything else that could add meat to the bone? Is there any equity available in any other assets? As a residential mortgage broker it’s not something you’ll always be looking at, you’ll be very focused on the transaction itself. GL: the client also feeds the broker the information saying, “I’ve got a property I want to raise money against,” and that’s it. the broker just isn’t bothered as the client wants to raise money on that. As Kit said, if you actually turn around and ask what the client has you can structure a better deal out of some other properties and make the deal more cost effective as well. If you could take a different piece of security that the client just didn’t want to utilise, bring LtV down, rates comes down and it’s more palatable to more lenders. Kit: there are brokers who still have this mentality of if it’s bridging,
it doesn’t matter about the credit status or the income scenario at all because it’s equity based lending. Yes it is equity based lending but ultimately someone’s got to take this deal off our hands when we exit. GL: It partly goes back to evolution as bridging historically wouldn’t have had to ask that sort of information because it didn’t have a need to. It was based on something completely different. to a degree you were almost a non-status lender before the credit crunch, before the evolution of what acceptable credit to the mainstream lenders was and what the acceptable sales time for a property has become. Maybe some of those brokers think of bridging in its past glories. AC: I would say to brokers: banish extreme optimism. over optimism about the validity of deals compared to what the lenders are prepared to do is a mis-marriage. not with all of them, but certainly a few. CS: that’s typified when brokers put down the exit route as one word, “sale”. that is really just not going to carry it. AC: We start with the position that we don’t believe that sale is the exit and that’s not a great answer. Nicholas Jones: the other side of this is understanding the regulation that goes with bridging. Some brokers may not think that regulation applies to bridging because it’s bridging. If you get phone calls and it’s a
first charge on someone’s private home it’s an FSA regulated deal. Yes it’s a bridging deal but it’s still FSA regulated. It goes back to education and understanding the deal from start to finish. n
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brIDgIng IntroDucer september 2011 27
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