Monthly Archives: January 2018

The job of the broker could be about to become a lot harder

The job of the broker could be about to become a lot harder

The job of the broker could be about to become a lot harder if the recent headlines suggesting bridging rates are predicted to go as low as 0.2% per month.

The headline isThe job of the broker could be about to become a lot harder a little surprising and potentially concerning. My first instinct is that it’s unlikely to happen, however if it does will it truly be a 0.2% rate as discussed at the FIBA conference.

A lender has to profit somewhere! A super cheap headline rate is one thing but bridging finance is very rarely rate alone.

There are many questions to ask; What are the upfront fees? What are the exit fees? Are there ‘hidden’ costs such as application fees or inflated valuation fees, or ‘enhanced’ legal costs? It doesn’t stop there either, be clear on the associated costs of collecting on debts in default, and clarify if the initial rate is simply discounted reverting to a far higher rate in default.

Taking this at face value, let’s assume this really is the deal of the century. Is this rate really for risk or simply a knee jerk reaction to an ever more crowded market? I personally think the later. We all know from recent experience that failing to price for risk does not lead to a long term sustainable market. Richard Deacon, sales director at Masthaven Bank was quoted in Bridging and Commercial as saying  “…but it’s all about the risk element and the risk to lenders, ourselves on the panel and the other lenders in the room as well…”

It most certainly is all about the risk and ensuring the market is pricing that risk. Lending at higher LTV’s, accepting poor credit ratings, failing to properly consider exit strategies, and reducing rates to ridiculous levels is all reminiscent of the non-conformist mortgage market and its subsequent crash.

Rates together with other criteria have to be assessed properly for a long term sustainable bridging market. At HFBS we continue to service a ‘niche’ end of the bridging market with properly considered criteria and a clear fee structure at sensible risk inspired rates.

As a lender that has been in the bridging market longer than most we have built our business on calculated risks rather than gambling to develop   consistency and fairness in a niche market.

Only time will tell with other lenders but I fear if underwriting and proper pricing for risk continues to suffer then lenders will disappear and only poorer client outcomes will result.

Eco home completed with bridging loan

ECO HOME COMPLETED WITH BRIDGING LOAN

Eco home completed with bridging loan from Holme Finance Bridging Solutions (HFBS) as it approves a thirty thousand pound development loan for the completion of the Eco home completed with bridging loanprefabricated home.

Approached by a successful property developer and experienced builder with a good track record, HFBS provided the loan to complete the internal fixings and decoration of a Scandinavian prefabricated four bedroomed detached home.

Dan Yendall-Collings, senior underwriter at HFBS says: “The client had purchased a plot of land for £60,000 as an investment. He paid cash for the land and bought a Scandinavian prefabricated house online for £30,000. The site went from bare land to a fully watertight building in just two days. However the internal completion stalled due to the client’s previous channel of development funding pulling out of the market. We were approached for a net loan of £30,000 required to complete the internal fixings and decoration.”

HFBS visited the site and carried out a full valuation. The site was valued at £150,000, with an end valuation of £375,000 upon completion of the development.

Dan continues: “Given the valuation we were happy to provide funding where other lenders were not. We had the deal done from application to transfer of funds within seven days.”

With an average completion taking less than seven days from enquiry to money in the bank, no solicitor involvement, no minimum valuation, and entirely privately funded, no bank mandates, no fixed rules, HFBS really mean business.

HFBS offer one the LOWEST second mortgage rates in the bridging finance market starting at just 0.95% month on advances from £5,000. HFBS Bridging Solutions have been advancing short-term funds, via a limited panel of intermediaries, for over 15 years with complete authority on their lending. Simpler, quicker, cheaper.