When a broker discusses an initial enquiry from a client who is considering a bridging loan, they will often explore not only the client’s background but also the driving factors behind the enquiry when looking for a suitable lender to achieve the outcome required.
It will come as no surprise to hear that the most popular driving factors for clients when picking a lender are, generally, the overall cost and speed.
If it’s a case of an imminent hard deadline and the client is willing to accept a higher cost provided that deadline is met, then great.
There are tangible reasons why some lenders/banks are quicker than others, and those lenders may reflect that in their pricing.
Clients approach a lender for X and end up getting Y
If a client is looking for the cheapest funding they can access, and if time is of no concern, there are lenders in the market that would openly admit they are not the quickest but they are picky and heavy on underwriting, which is reflected in the competitive pricing.
You’re probably thinking, ‘It’s never that straightforward,’ and I would completely agree. This is where it gets interesting.
More often than not, we are dealing in shades of grey. Clients want a quick turnaround, but don’t want to pay a premium.
There are nuances with every lender, which may tip the scales for a broker’s recommendation to a client one way or another, leaning towards lenders geared for price or speed.
Flexible criteria
Flexibility within criteria also needs to be taken into account, alongside cost.
For example, one thing clients very rarely ask for — but which should always be in the back of a broker’s mind — is common-sense decision making from a lender. A client isn’t to know this, which is why it is so important to discuss these unpublished subtleties with the clients.
Lenders that profess to be flexible but won’t go outside criteria, even if everyone agrees it would make sense, are not flexible
Particularly in complex cases, the ability to negotiate with a lender during the process of a deal (in what can be an ever-changing landscape) is crucial for a broker. That fundamentally requires a lender that has the facility to go outside criteria when warranted; the ability to speak to a genuine decision maker; ultimately, a common-sense approach to a mutually beneficial outcome for all.
Ideally, flexible criteria in the first place would also be a welcome addition!
An issue I am seeing increasingly is what seems to be the use of rate as bait. This is using the broker’s obligation to seriously consider cost against them.
Unfortunately, in a competitive landscape lenders are making noise to be heard; not because of their great service, not because of their flexibility and common-sense approach, but because of their rate. It is lenders forcing themselves into the conversation for consideration on a deal, when they usually wouldn’t be.
It gets clients in the door who are under the illusion they are with a lender that is well priced and flexible, because the lender advertises a low rate and says it is flexible.
If your USP is cost, then actually do business on the rates that are marketed, even if a few speed bumps show up throughout the process
Lenders that profess to be flexible but won’t go outside criteria, even if everyone agrees it would make sense, are not flexible.
Ultimately, there are too many clients in the market at the moment who have been left frustrated and feeling like they have been led up the garden path because they approached a lender for X and ended up getting Y; not because the deal fell out of the lender’s criteria, but because the lender’s appetite changed.
Similarly, there are plenty of brokers who have lost deals because they warned the client of this, but the client took the bait elsewhere.
Unfortunately, there are many clients who have not had the luxury to go back to market, because by the time the goalposts had changed they were either too far into the process or were financially committed. Similarly, brokers rarely get a second bite at the cherry.
One thing clients very rarely ask for — but which should always be in the back of a broker’s mind — is common-sense decision making from a lender
Lenders attract clients with their USP. If your USP is flexibility, then practise what you preach. Have an experienced team, which is able to make calls or to escalate something outside criteria for a policy exception. If your USP is cost, then actually do business on the rates that are marketed, even if a few speed bumps show up throughout the process.
No deal is perfect and things do go wrong but, when it comes to a broker making a call on the next recommendation, the lender that works along with the broker, with the best outcome for the client at the forefront, would always be near the top of my list.
Sam O’Neill is head of bridging at Kis Finance
This article featured in the February 2025 edition of Mortgage Strategy.
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