It also recommended that brokers ensure clients know the repayment date.
The Society of Mortgage Professionals has advised brokers dealing with bridging finance to get to grips with their client’s exit strategy.
Its bridging finance good practice guide also recommended that brokers make sure their clients know the repayment date and ensure there is nothing on the horizon that could delay that payment.
It said brokers should ensure all the paperwork and documentation the lender requires is sent as one package, rather than sent at different stages.
David Thomas, chair of the Society of Mortgage Professionals, said: “There are many benefits to bridging loans such as speedy application, quick transfer of funds and broader lending criteria but it is vital brokers understand the risks as well as the benefits of this product.
“While it may be difficult to gauge the property market 12 months from the start of a bridge, the borrower needs to be certain that they will be able to realise their desired value at the term end in order to ensure that their property sells should this be the exit strategy to repay the bridging loan.”
