REVIEW
COMMERCIAL
What every broker wants Brian Rubins director, Alternative Bridging Corporation
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s a lender with over 30 years’ experience, I thought I knew what brokers want. But as times go by, priorities change, so a fresh look is always in order. If we do not give our brokers what they reasonably want, another lender will! Brokers expect high-quality service from the lender – but in practice, what does this mean? Lenders must be able to review new proposals and issue heads of terms in hours, not days. For this to be possible, it is essential that our brokers provide adequate, accurate information. Without it, either delay will occur or guesses will be made, and terms may need to change at a later date – and no one wants that. Lenders’ underwriters must have a smooth process for instructing valuers and solicitors. Although the choice of valuer for private dwellings is often successfully subcontracted to a valuation platform such as Method, this is not always suitable for commercial assets and development finance. Here, the lender needs close working relationships with its professionals and to know which valuer is best suited for the instruction and has capacity for the work. Brokers’ demands are driven by the need to satisfy their clients’ wishes; in doing so, their personal requirements will also be fulfilled. Recent research by Ernst & Young’s financial services subsidiary, EY, confirms that number one is strong relationships – so what is it that lenders must do to create these relationships? The EY report identifies speed of execution as the most important element in choosing a lender. However, of EY’s respondents, 30 per cent reported completion times for bridging loans of 35 to 40 days, and a
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BRIDGING INTRODUCER JUNE 2022
further 32 per cent reported 40 to 45 days. Brokers and lenders alike want and need this timescale to be reduced, so what can lenders do to achieve this? One solution is obvious: to be adequately staffed, to respond immediately, and to be on top of the process. This is not always happening with the new, smaller lenders. Secondly, one-to-one discussion is far more effective than other methods, so we must be willing to engage with our introducers by phone or Zoom rather than by email. Also, working from home is not an excuse for poor service – brokers expect, and deserve, better. The due diligence process cannot be allowed to delay completion. Solicitors and valuers need to complete their tasks, and to enable them to do so in a timely fashion, the broker must be skilled in obtaining and supplying the necessary information and the lender must perform like the polished conductor of an orchestra, ensuring all the members are in harmony. Brokers need bridging loans to complete quickly, which is confirmed by our own experience at Alternative Bridging. Achieving this requires dedication and co-operation, and brokers reward lenders who provide this and avoid those who cannot. Loan to value (LTV) has always been an issue, but more recently, brokers’ requirements and lenders’ aspirations appear to have come together. This may be because borrowers’ requirements have become less demanding – or, more likely, property values have risen sufficiently to satisfy them at a lower LTV. But brokers do need lenders to be supportive when there is a down valuation – for the lender to increase the LTV from, say, 70 per cent to 75 per cent so that the opportunity is not lost. They need, in a word, flexibility. Surprisingly, pricing of loans has become a less significant factor in brokers’ choice of lender. This is partially due to interest rate compression among the larger and more established lenders and the
recognition that a 10-basis-point reduction is of no value if the proposal is not completed. Reducing interest rates and enabling introducers to be competitive is important, but we believe certainty of completion is more significant for our brokers and their clients. Both must be treated fairly, with transparency regarding detailed heads of terms that identify all costs and terms. And woe betide the lender who makes promises that cannot be fulfilled or changes the terms at the last minute – or, worse still, fails to deliver. This behaviour cuts deeply, and the wounds do not heal quickly. They will deter the offended broker from introducing further opportunities. Introducers want reliability. A recent trend is the recognition of the importance of relationship management. This has grown as brokers appreciate more and more the value of repeat business. Having performed well for the borrower with the bridging loan, why would the borrower go elsewhere for the refinance? Creating this relationship depends upon the lender being responsive and constructive, as otherwise it will reflect badly upon the introducer. Similarly, a wide choice of products gives our brokers access to one-stop shops where they can start with a bridge or overdraft, include a refurbishment facility, and transfer to a term loan. And finally, back to strong relationships. A strong relationship between broker and lender is the key to good business. And it is not just what brokers want; it is equally important to us lenders. No one factor will encourage an introducer to favour a particular lender, but the combination of speed of execution, flexibility, and a wide range of products, competitive interest rates, and LTVs – and, most of all, trust and reliability – are the foundations for strong, enduring relationships between brokers and lenders. www.sfintroducer.com
