an important gap build a better bridge and do the right thing by your client


times which may be attractive to those who want to move quickly and benefit from the slightly advantageous rates. This product simply cannot be compared to a mainstream buy-to-let mortgage because it will inevitably be more expensive.


RJ: Quite simply the Dragonfly product (the only one actually in existence right now) is more expensive than standard buy-to- let mortgages with rates between 8.99% and 9.99%. The product can be made to look more attractive by deferring part of the loan to the end date but this is a riskier strategy and clients should only do this if they are confident that the deferment fits into their strategy. This product does work pretty well with bigger ticket cases which aren’t currently attractive to mainstream buy-to-let lenders and are more in line with commercial lending rates. I can think of a few cases that we have done as a business on this product that simply wouldn’t have been done if it hadn’t of existed so it does have its place.


SOME LENDERS CHARGE BORROWERS FOR THE FULL FIXED TERM OF A BRIDGE EVEN IF THE CLIENT ONLY USES PART OF THE TERM – ARE THERE REASONS TO USE THESE LENDERS WHEN OTHERS ARE MORE FLEXIBLE?


LH: The majority of lenders in the space will apply a pro-rata calculation when the loan is repaid to ensure that borrowers only pay interest for the term utilised. It


www.mortgageintroducer.com


is unusual for a lender to charge interest for a predefined term regardless of the actual length of the bridge and this would result in an increase in the actual rate of interest if a client was to repay early. In my opinion this seems an unfair calculation of interest and there are plenty of lenders who you can go to that will charge interest for the actual duration of the loan and not the proposed duration.


RJ: It’s pretty misleading to say that ‘some lenders’ charge clients for the term of the loan even if it’s not used. I am certainly only aware of one ASTL lender that does this. Although we wouldn’t actively work with that lender because of this restriction on most of our deals we have worked with them on several and their documents are extremely clear and the client can’t claim that they weren’t aware. This lender certainly isn’t trying to rip off clients, they simply access funds where they have the same restriction which is why they have to pass this onto the ultimate client. Again, with this particular lender, a product or two are available that don’t exist elsewhere. As long as they are clear and up front with this, I don’t see the issue.


HOW CAN I LINK UP WITH SOME OF THE SMALLER PRIVATE BRIDGING LENDERS THAT DON’T NECESSARILY ADVERTISE?


LH: The only way you tend to come across these boutique


companies and individuals is word of mouth but in my opinion there is no sense in hunting them down when the market is so well serviced already. If you do happen to establish a relationship with a small private lender it can be a fruitful relationship but one that would usually be initiated by an introduction or by chance. An advantage of a small privately funded lender is that decisions can often be made very quickly and they do not have the constraints that some short-term lenders have in terms of what they can fund and how they have to structure their pricing offering maximum flexibility. There are of course considerations on the flip side, such as ensuring that the funder is reputable and that you are comfortable that your clients will be treated fairly post completion as well as during the arranging process where you will be more heavily involved.


RJ: Most private banks have no appetite to work with new introducers. Access to them tends to be strictly through introduction via a high net worth specialist like Chartwell Funding, SPF Private Clients, Capital Private Finance and Coreco. Businesses like these would have spent many years harvesting strong partnerships and will have access to key decision makers via a phone call or e-mail. These relationships are certainly not transferrable and any attempt to cut the introducer out on subsequent deals will be aggressively rebuffed.


BRIDGING INTRODUCER MAY 2012 21


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40