Big bridging loans that come together in a matter of days always get a fair bit of media coverage.
The lenders and brokers are keen to blow their own trumpets and show what they can do, while the media like big numbers and quick turnarounds.
But what really happens under the bonnet on these types of deals? What makes them come together so quickly? And, if these kind of timescales really are possible, why aren’t they the rule rather than the exception?
To get to the bottom of big deals that take place in record-breaking times, let’s look at an example.
We recently completed a £3.5m bridging loan in just 48 hours. This deal was probably a textbook example of bridging, albeit one in fast forward.
Basically, we had to step in to rescue a broker’s client who had been let down by her bank at the last minute.
The client was buying a property abroad and was remortgaging her UK home to free up the necessary funds.
The fact that the client was let down at the eleventh hour offers a clue as to why we were able to lend so quickly and exactly how these kind of lightning-fast deals tend to happen.
Generally speaking, a lot of the paperwork has already been completed by the client’s solicitor, and a valuation has already taken place.
Indeed, whatever any lender might say to the contrary, the quickest deals are almost always those where some, or all, of the legwork, namely valuation and legals, are presented to the bridging lender on a plate.
Rarely are the quickest deals the ones that come in cold.
For example, in the £3.5m bridge above, the client’s solicitor had already prepared the full legal pack for the originally intended bank, including all searches, etc.
Once the high street lender had notified the client that they couldn’t meet the client’s deadline – she was under notice to complete on the overseas property – we were introduced to the client via her broker and discussed and agreed terms.
She then signed all the relevant paperwork and we issued our terms and instructed our solicitors.
The full legal pack was then biked across to our solicitor and the surveyor promptly retyped the existing valuation in our favour (luckily, they were on our panel).
Fortunately, our asset manager was in the area the next day and was able to carry out a full sense check on the client’s UK property to make sure everything about the deal stacked up.
And even if a valuation hadn’t already taken place, it doesn’t have to slow things up too much if a surveyor is able to go out immediately. Believe it or not, this can happen if you are dealing with the right firms.
Our solicitor worked through the night and we were able to complete in the timeframe required.
It helped that the broker knew exactly what our requirements were and could supply everything we needed at the outset. The role of the broker certainly shouldn’t be overlooked.
For loans to come together quickly, the client’s broker has to be fully aware of the processes and requirements of the bridging lender, and able to ensure that all ducks are in a row.
The broker, like the valuer, solicitor, asset manager and lender, is a key part of the chain.