News & Views

Business as usual for Fincorp

Short-term bridging lender Fincorp has revealed plans to hire a new sales director to start in January 2016 and confirmed it is “business as usual” at the lender. The announcement comes after news that directors Nigel Alexander and Matthew Anderson will leave Fincorp at the end of the year.

Ronnie Natas, founding director of Fincorp, said he was sorry to see the pair go after more than a decade working together but that he wished them the best of luck for the future.
Ronnie said: “While this is an ending of sorts for Fincorp I am pleased to say it’s also the beginning of a new phase for us. We have significant funding and are very much in business – we’re also close to announcing our new sales director who will work with our existing team to help serve brokers looking for reliable bridging finance.”

Ronnie added that the lender would be taking a new approach in 2016 with a focus on choice for brokers. Earlier this year Fincorp introduced a new product available with fees to sit alongside its traditional no fee deals. Both lines are available on residential, heavy or light refurb projects, auction finance and minor development facilities.

Ronnie added: “Offering brokers the chance to choose a fee or no fee deal makes sense – it’s the approach offered in the mainstream market and can make a big difference to the cost of the loan depending on its length. We have always prided ourselves on our clear and simple approach to pricing and that’s not about to change – we just want to add flexibility into the equation for our intermediary partners.”

Fincorp has been offering bridging finance to property developers and professionals for the past 26 years. Ronnie said: “Throughout that time we have remained reliable and firm in our funding promises. We value our relationships with brokers highly and can reassure them that it’s definitely business as usual at Fincorp.”

Fincorp launches first fees or no fees bridging

Refurbishment loan up to 12 months that “gives customers the choice”

Fincorp has broken with 27 years’ tradition as the market’s only no fees bridging lender to launch a bridging deal that puts the pricing power in the hands of its borrowers.

Today the lender has launched a 12-month refurbishment loan at 1.25 per cent per month up to 70 per cent loan to value, with a 1 per cent arrangement fee and 1 per cent redemption fee. Fincorp is also offering to loan up to 70 per cent of the refurbishment costs. The same deal is also available to customers at a flat rate of 1.5 per cent per month with no additional fees. Interest and fees can be paid up front or rolled up into the loan and paid at redemption. Fincorp will not charge interest on any interest until it becomes due. 

Clients wishing to finance both heavy and light refurbishment projects for a period up to 12 months are eligible to apply for loan. And brokers can earn a 1 per cent procuration fee on both deals, paid up front by the lender directly on completion of the deal. 

Nigel Alexander, director of Fincorp, said: “This is about putting the power back in the customer’s hands – we want to offer them the choice to spread their costs evenly across the period of the loan without the cost of an up-front arrangement fee. But we also want to do business with clients who want the flexibility of a lower monthly rate and the option to pay fees.”

It is the lender’s belief that until now, borrowers wanting to compare the cost of loans with and without fees have had to look at different lenders with different criteria and with which they may have different strengths of relationship.

“We wanted to change that status quo. After listening to our intermediary partners’ feedback, we concluded that our commitment to being clear and simple about our charging didn’t mean we couldn’t offer borrowers flexibility,” said Alexander. “The bridging market has changed a lot in the past seven years and this move demonstrates we aren’t afraid to change with it, where that is in the best interests of our clients.”

Alexander said that the lender’s decision to break with its long-held “no fees” stance was undoubtedly the result of increasing competition in the bridging market where headline rates have been dropping steadily for the past two to three years.

But he added: “Giving customers a choice about how to pay for their loans is the absolute standard in the mainstream residential mortgage market – and in the buy-to-let space. Our decision to offer our clients that same choice in the bridging market is the next step in the evolution of the bridging market – and we believe it’s a responsible step to take.”

The Fincorp Flexible Refurbishment Loan is available immediately and is funded through a £15 million tranche of finance. Alexander added: “We are keen to roll this approach out on a limited basis initially to test the market’s appetite. If the refurbishment product is successful, we are considering moving to a model that offers the same flexibility on fees to all of our clients on all types of bridging finance in future.”

Brokers demand greater transparency on bridging costs

Offering clients the lowest headline rate available in the bridging market might not be enough to satisfy the regulator, which is keen to see more transparency, a broker has warned.

Speaking at a Fincorp event Beverley Loggia, director of Oliver Rae, said: “Bridging is becoming more and more available to clients and more and more a necessity given the complication and regulation in our industry at the moment. And it is something the Financial Conduct Authority is looking at – the pricing and structuring of bridging deals – so well worth considering when you’re putting a solution to your client.”

Her comments followed a suggestion from bridging lender Fincorp’s director Matthew Anderson, that keeping bridging clear and simple was becoming even more important in today’s market. He said: “I feel like a broken record sometimes when I talk about headline rates and the fact that they aren’t always the golden egg they might seem. I hear from clients far too regularly that they’ve been hit by heavy fees on the way into a deal or the way out.

“While bridging lenders have become a lot more professional and we are lucky to have a lot of great, honest people in this industry, there are still too many examples of clients who didn’t feel they were made aware of the true cost of a deal before they signed on the dotted line.”

Loggia said: “Fincorp’s offering is different from other providers in the market because there are no fees. It may appear that their rate is slightly more expensive, but I think their offering is a good example of transparent charging. There is no small print, no compounding interest, no interest charged on fees rolled up. It may not suit every scenario, but it demonstrates how easy it is to be up front about what a loan actually costs.” 

In September, FCA mortgage and mutual sector manager Lynda Blackwell revealed the regulator had some concerns about the bridging market. And with second charge mortgages falling under the regulator’s remit earlier this year, Fincorp’s directors Anderson and Nigel Alexander have both been vocal about the need for more transparency in charging.

Anderson said: “We are not suggesting that no fees is the only way to charge – far from it. People need choice and flexibility and sometimes fees are worth paying. The issue isn’t the fee itself, it’s the fact it can be so hard for clients to really get a grip on what a loan is actually costing them. This isn’t about badmouthing the market either – we just think it’s good business to be honest with our customers and make sure they fully understand the contract they’re signing with us.”

Also speaking at the Fincorp event Marcus Rolle, director of One Stop Finance, said: “Headline rates and up front fees are part of a range of things that have to be considered on a bridging deal – it’s part of an overall package. If you’ve got a bridge that you know is a three month deal, a lender that doesn’t have an up front fee that may have a slightly higher margin is going to be a better bet than someone who appears to be cheaper but has a chunky fee to start with. You’ve got to know the deal and you have to get an honest answer from the client on how long they need the money for. There’s a cross over point and you have to do your analysis carefully before you make your recommendation on which offer is the better option.”

He added: “Bridging finance is an important part of any commercial broker’s toolkit. With the clearing banks not necessarily wanting to play ball at the moment on what is seen by some as a riskier end of the market, developers need access to a good bridger.”