Why clarity and accuracy are key
The following article was provided by Lorraine Hart (pictured), head of credit and risk at Roma Finance.
Lender delays and requests for further information can make or break your bridging customer’s property project if time is of the essence.
Even if the case isn’t time sensitive, delays can reflect poorly on you with your customer. After all, they just want to know you’ve managed to secure competitive funding for them.
Luckily, you have the skills, knowledge and tools to do exactly that.
By doing everything in your power pre-submission to smooth your customer’s journey to offer, you can deliver the reassurance they need. And you’ll free up your own time to work on other business.
What not to do
Avoiding common mistakes when submitting bridging business means you can help speed up processing, reduce delays and give your customer the certainty they need to continue planning their property project.
Below are the most common causes of delay that come up time and again at Roma.
Sidestep these common mistakes and boost the chances of your cases moving straight to offer.
Underestimating the costs
Most bridging lenders want to see full costings of the project before they make a lending decision, and a common problem is that these costings aren’t comprehensive or realistic.
We need to see the whole project accurately costed, including all materials and labour. In the current climate of rising prices, many lenders will also be asking for a contingency of at least 10% built into the budget. This isn’t a nice to have, it’s a need to have, so we know the project will be able to be completed in the context of rapidly rising material and labour costs.
If the costings you supply aren’t detailed enough, you can expect a delay while the lender asks for more information.
Unrealistic schedule of works
If you don’t give the lender a proper schedule of works on submission of a refurbishment or development bridging case, they may not be able to make a lending decision.
If the borrower wants to take a bridging loan for 12 months, for example, we need to see that the project can realistically be completed during that timeframe. That includes having enough time left over for them to redeem the loan. Depending on their exit strategy, this might mean building in time to sell the property.
In the current climate, we’re seeing delays in construction and development projects, so those timings need to be realistic, with leeway built in to accommodate delays.
Missing documentation
If you don’t send everything your lender requires to make a decision, they will have to come back to you for the missing information.
It sounds simple, but missing documentation or information gaps in application forms are the most common cause of delays in bridging.
As lenders, we spend time streamlining our forms and requests for documentation to speed up the whole process and make it easier for you and your customer.
So, if we’ve asked for it, you can guarantee we really need it to make a decision. Incomplete applications will be delayed while we come back to you for the missing information.
Your lender should give you a full list of what they need upfront so you can prime your customer to be gathering their documentation from the start. If you can submit everything needed on submission, you’re halfway towards getting the case over the line.
Failure to explain the project
In addition to all the information we request, remember that lenders are looking for a clear, concise explanation of the customer’s property project.
This boils down to understanding why they need the loan and why they’re using a short-term lender. There’s plenty of good reasons, but we need complete clarity on the project, including any potential problems.
When the broker fails to give us an overall picture of the case, including the project and the customer’s experience, we often need to come back with more questions, causing delay.
Avoid that by being upfront and candid from the start.
