Over half of brokers have admitted to providing bridging finance to clients even though they don’t have a good knowledge of the market according to a recent industry report by West One and Brightstar.
While its great news that three-quarters of traditional brokers are recognising the important role bridging finance can make to your property finance strategy, it’s extremely concerning that a majority of brokers are offering advice knowing that their knowledge is insufficient.
Bridging finance is a whole different ballgame to non-specialist finance, and giving advice on it without having enough knowledge of the market is hugely harmful to clients.
Sadly, unqualified advice is a consequence of the specialist finance industry being unregulated and is a huge part of why the industry was plagued with a poor reputation in the early 2000’s.
And it’s for this very reason we’re pushing for regulation in the space.
In the meantime though, what can you do to protect yourself from underqualified brokers?
Your buy-to-let broker may well be brilliant at what they do, but that doesn’t mean they have experience with specialist lending.
Question their specialist experience.
Are they regularly sourcing specialist cases? How many lenders do they deal with? What picture of the market do they have? Is there an expert they can refer you to?
Check their bridging finance reviews
Do they have any reviews related to bridging finance? If the vast majority of their reviews are related to residential or buy-to-let mortgages then its fairly clear that they are not a specialist provider and you should avoid.
Find a specialist bridging expert
If you’ve been advised that a bridging loan is the right course of action for you perhaps to prevent a chain break or to purchase at auction – look for a company that specialises in bridging finance.
This really is the only way to ensure that the people giving you advice really know their apples from their oranges.
The bridging market is constantly shifting as lenders trim rates and evolve criteria to give themselves a competitive edge and if your broker doesn’t live and breathe bridging finance, you could end up getting stung.
At Propp, we’re seeing a pattern of clients coming to us to compare a deal their standard broker has sourced. 9 times out of 10, they were being guided towards a ‘bridge-to-let’ product which are, in our opinion, usually the lazy choice.
From the perspective of an unexperienced broker, a bridge-to-let looks great! You get your short-term finance and a guaranteed exit onto a buy-to-let mortgage. What’s not to love?
Well, you pay for convenience and these deals almost always end up costing you much more.
Always, always, always deal with an expert.