Q: How does bridging finance fit into this new environment?
A: Bridging has enjoyed spectacular success, reaching over £4bn of lending in recent months, up from just £2bn a couple of years ago. Bridging lenders successfully stepped in to fill the void formed when high street banks retreated from the market after 2008. There are now a variety of lenders with a choice of offerings that can be very useful, especially where time is of the essence for the client. Bridging is fast and flexible financing, which can really help in the right circumstances.
Bridging loans can be used shrewdly by professional developers, buy-to-let investors and those who can refurbish and sell on a property quickly. This can include buying a property swiftly to get it off the open market, or buying at auction where there is typically just 28 days for completion. Those people then have the option to repay the loan by way of refinancing or selling the property. Bridging finance allows them to do that and, while interest rates are higher, these professionals simply factor that cost into the overall deal. These loans can also be used by individuals who encounter completion delays or a broken property chain when they’re buying a house.
For advisers, bridging offers access to customers who can prove very lucrative. A professional property developer might do 2 or 3 deals a year, where they first purchase those properties then sell or refinance, depending on their exit strategy. That gives potential for 3-6 transactions an adviser could do for that customer in a year. Brokers also build up a much stronger bond with that sort of client than with someone they might only see every couple of years at their review.
Q: What role does Enterprise Finance play?
A: The first thing to highlight is that Enterprise has always put customers at the heart of what we do, and treating customers fairly is our mind-set. We have been FCA regulated since 2004, well before we were required to be. We were already regulated by the Consumer Credit Act and the Office of Fair Trading, but we welcomed the extra layer of FCA regulation. As we are 100% dedicated to intermediaries and our introducing brokers are all FCA regulated, we wanted to embrace the same standards. We now have a very strong, in-house compliance team of 5, who deal with everything in our company, from procedures to audit to file checking. All that makes sure we’re a safe, professional, customer-orientated partner that brokers can rely on to work in their clients’ best interests. That’s critical when brokers have to work with a Master Broker like us, to access many of the specialist lenders we deal with. And we help brokers limit reputation risk when working in this specialist sector, as we are experts with a proven track record.
