Choosing from the Bridging menu

Bridging Connections is a series of exclusive articles written for UTB by experiences professionals within the Bridging industry. In this edition Phil Moore, Director of Touchstone Corporate Ltd, discussed the art of decision-making in a market so full of choices.

Phil Moore has worked in bridging and real estate finance broking for over 20 years, after leaving the corporate banking world. Touchstone Corporate Ltd was established just over 10 years ago and specialises in all areas of real estate and commercial finance. Phil still enjoys the buzz of making deals happen for clients and working with a fantastic team at Touchstone.

Choosing from the Bridging menu

Are you like me? when I sit in a restaurant looking at the long menu and it all sounds great, I never want to miss out on the best choice.  Despite how tempting the choices are though, I often end up ordering the same thing because I know it is good, and reliable, and I won’t end up feeling disappointed and let down.

When I look at the number of potential bridging lenders and options available, I often feel the same way. I have no idea how many bridging loan providers there are now, and I ask this question of BDMs and others, with answers ranging from 200 – 400. I’d like to know the answer but I’m not aware of any way of finding out.

We all love Bridging Finance and it’s not difficult to work out why:  It’s simple, it’s fast, it’s flexible and it pays well. We receive good fees, get paid quickly and move on to the next deal. So, as a broker, what’s not to like? It is also evidently true for lenders as we see a steady stream of new Bridging entrants to the market.

If only it was always quite so straightforward. Most of us have heard about and experienced for ourselves instances where some lenders have changed their stance during the application/underwriting process. Underwriters or Credit can take a different view from that put across by the sales teams and currently the underwriters seem to have the upper hand. Times when funds were not available at completion may be in the past, but I have recently heard of a case when a lender, who shall remain nameless, refused to release funds on the day of completion.  It is also still very fresh in my mind that at the start of the Covid pandemic, some lenders withdrew from the market, not only new deals but existing pipeline and, in some cases, even deals that were already post offer stage.   The bridging and development market may have passed its’ infancy, but there are still lenders that are new and looking to exploit a lucrative market rather than establish a reputable and long-lasting lending business.

Just like the restaurant menu, the choices available for an unregulated bridging or development loan appear almost limitless and there’s not one sourcing system that lists them all. So how do we ensure that the providers we use are the right ones for the client?  There are so many to choose from and a disturbing similarity with what they offer. Due diligence on hundreds of potential lenders is not practicable and membership of trade bodies does not seem to give any better guarantee. We want lenders that will say ‘yes’ and then work with us to get a deal done on time.

The advantage that established specialist brokers like Touchstone have is that we have tried and tested many lenders and already made most of the mistakes you do along the way. Regulated lenders with full banking licences are a good starting point, but other lenders have proven very reliable, and time of uninterrupted trading can be a good indicator of quality. Our preference is to use professional and dependable long-term lenders who understand a deal and have established themselves in the market. Those with a clear and proven track record that we can work with to make a deal happen. Just like the choice on the menu, it may not be as exciting as the specials, but the result will be just what’s needed.