The current bridging market and top tips for borrowers
PMJ Capital is a joint venture bridging business, launched by Cowgills in 2015 and headed by property finance director Dave Rainford. Dave recently wrote this article for the Financial Intermediary & Broker Association (FIBA).
The bridging market continues to expand and with new lenders entering the market with what seems to be increasing regulatory demands it is fair to say the market is confusing at best. Equally the offering is diverse, as indeed are the products available, but in my opinion the fundamentals to market are the ability to deliver a funding package with the minimum of fuss and having the funds to complete.
Clearly price will be an influencing factor for borrowers, and whilst I accept lenders need to be competitive, for transactions which are usually time sensitive or opportunity driven I would argue that confidence in the availability of funding and the lender principals remains paramount. A borrower was rarely unable to complete on or lost a deal due to the price of borrowed funds but deals have been lost as a result of the inefficiencies of lenders whether through lack of funds, misunderstanding of the transaction, an inability to be commercial/flexible or ‘changing of the goalposts’.
The Ronseal advert slogan “we do what it says on the tin” sums up one of the key attributes of a short term lender. Cut away all the jargon and the products, the borrower simply wants to know that if a lender says they can do something then they will do it and will stick with their decisions, subject of course to the usual due diligence confirming the facts they based their decision to lend on at the outset.
Communication is equally as important throughout the process and this extends to both the lenders and borrowers professional teams. Bridging whilst not in itself complex can be made difficult if parties are not clear on what is expected of them, including information requirements at the outset and not having constructive dialogue as the case progresses. Personally I am a strong advocate for ‘picking up the phone’ as not surprisingly more can often be achieved in 10 minutes of dialogue as can in a day’s round of emails. Sometimes the lender just needs to get stuck in to make things happen!
My top 5 tips to borrowers therefore would be as follows:
1 – Know your lender. Understand whether they are lending their own money, if they are subject to funding lines or really just acting in the role of a packager.
2 – Have the ability to talk to a decision maker and have confidence that they understand the transaction and will be contactable if you need to speak to them.
3 – Be completely upfront about any wrinkles in the transaction or background issues that may come out in the due diligence process.
4 – Select your appointed solicitor with care – someone who has experience of dealing with bridging lenders helps.
5 – Make sure you stay in the loop. It is as much the borrowers’ responsibility to drive a deal forward as it is the broker, solicitor or lender. Equally don’t be frightened to pick up the phone.
PMJ Capital is a privately owned short term principal lender which uses its own funds and is not reliant on any external parties or funders. Our borrowers have access to a decision maker and we pride ourselves on making pragmatic and common sense decision based on years of experience in property lending.
The information was correct at time of publishing but may now be out of date.