The commercial bridging market is not all about rates
Wayne Lee - Hope Capital
1st October 2018
"Cheaper rates come at a price; that cash tends to be clawed back somehow, in the form of extension fees, tariff of charges, default interest etc "
A decade ago, bridging rates were relatively high and the choice of funder was limited.
Now, the bridging market is much bigger and hugely competitive, with new lenders coming on the market every year. This competition has pushed rates down and LTVs up, making bridging a much more viable option for all kinds of borrowers, residential and commercial alike.
And with interest rates so low, many lenders have access to much cheaper money so are able to drive down rates even lower.
And while this all sounds great for the borrower, the problem is, cheaper rates come at a price; that cash tends to be clawed back somehow, in the form of extension fees, tariff of charges, default interest, etc. In addition, while many of these lenders are enticing brokers and their clients with what seem to be cheap rates, in some cases the other casualty of cheap money is service.
When lenders are using cheap funding lines, they can sometimes come with much stricter underwriting, meaning the lender needs to ask the borrower for much more in terms of information and documentation as part of the application process
The borrower then gets bogged down with the demands of the lender which in turn slows the process, when the borrower approached a bridging lender for a reason – speed.
In addition, if the client can’t provide the all of the information requested, the lender may change the rate and/or the LTV.
This means the client thought they were getting one deal, and they end up with something different, or the whole thing collapses because they cannot provide all the information the lender is demanding.
At Hope Capital, we would never move the goal posts. Unless there is a material change in the deal, we always stick by what we have said, and that is why so many brokers looking for bridging loans for their clients come to us.
We always do the proper due diligence but don’t ask for anything onerous. We know that borrowers come to bridging lenders because they to turn the deal around quickly so we take a balanced approach and will always show flexibility where required.
Whatever the situation, we are always 100% focused on getting the deal done, quickly and seamlessly. We will never compromise our service for rates, and as long as we are not a million miles away on rates, we know our service will win through.
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