Pick a bridging lender, any bridging lender

Brokers bemused by the sheer number and choice of bridging lenders on offer at the NACFB Expo on Wednesday 26 June have been urged to take Fincorp’s Pick a Lender quick quiz.

With so many specialist bridging lenders and 86 firms in total exhibiting at the show this week the amount of information on offer can be overwhelming.

So Fincorp, whose mantra is “clear and simple”, has compiled a quick quiz for brokers arriving at the NACFB Expo to help them negotiate the show.

Nigel Alexander, director at Fincorp, said: “I hold my hands up right now and acknowledge that, yes, we’re a bridging lender. But we thought brokers who haven’t done any bridging before might be glad of a few pointers to get the conversation flowing with lenders across the whole market.

“There are a lot of bridgers out there now and many of us do a similar thing. But there are some subtle differences between us and if you haven’t experienced the market before, asking some of the questions in our quiz might help fill in the blanks.”

Here are some questions to ask yourself and the lenders you meet as you wander the corridors of finance.

  1. 1.     What are some key questions to ask the BDM to test the lender’s proposition?

    1. What’s more important – the rate or reliability in seeing a deal through?

    2. How do you negotiate a rate with brokers?

    3. Where does your money come from and do you need loans to redeem before you can complete on a new deal?

    4. What’s your conversion rate from deals brought to you to deals done?

  1. 2.     With so many new bridging lenders in the market, how do you understand if the lender is reputable or not?

    1. Be wary if the lender is being vague about the types of deal they do – “we’ll do anything if the security’s right” should ring alarm bells because the risk has to be right too

    2. You ask them about penal rates if your client needs to renegotiate the loan and they won’t give a straight answer

    3. You ask if you’ll be paid bonus commissions for bringing them a target number of cases and they look shifty – many lenders have cosy relationships with a few “golden ticket” brokers and packagers

    4. How do they justify the fees they charge your clients?

  1. 3.     Property development is never an exact science so what happens to your client if things don’t go according to plan?

    1. The client will be charged a penal rate for the period the loan is required in excess of the original term

    2. The client will need to pay a penal rate of interest on the loan if he exceeds the term but this will be applied to the entire term of the loan by backdating interest

    3. The client will be charged an extension fee and a penal rate on the entire term of the loan

    4. The client will be charged a low penalty to cover the lender’s costs given the unexpectedly term extension

  1. 4.     How do you tell if a bridging lender is any good?

    1. They have directors on their stand willing to talk about specific deals

    2. Headline rates are only half the story – always check the arrangement, extension and redemption fees not to mention legal fees and valuations

    3. Transparency is key – if they’re reputable they won’t have a problem answering any questions

    4. Serving beer on their stand doesn’t necessarily mean they’re a great lender.

Fincorp is also exhibiting at the Expo with directors Alexander, Matthew Anderson and business development manager Gary Playle at stand number E02/E03.

Alexander added: “We’re always happy to talk to new brokers and existing partners about what we can help their clients achieve. So drop by and we’ll be happy to answer your questions.”

Fincorp offers both first and second charge bridging loans secured on property based in London and the South East of England.