Mortgage News
How can bridging become trusted?
There are two key ways for consumers to become more aware of bridging – either through the national press or from a trusted financial adviser.
Bridging can be a vital solution to certain problems at critical times; such as the traditional one where a customer has purchased a new home, but the sale of the old home has hit a snag.
At times such as these, or to help with short-term business funding with a clear exit strategy, it can be a critical form of funding and one which it would benefit many consumers to know about.
Consumers usually have little or no knowledge of bridging, and may only need it once in their lives. As someone put it to me once “no one gets up in the morning and says ‘today I’m going to look for a bridging loan'”.
Bridging can be a better solution than credit card or payday borrowing; and a clued-up broker will have a good knowledge of the part bridging can play in his or her armoury.
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However, bridging is not a cure for all funding challenges, nor should it be used as lending of last resort. Bridging should be considered where there is a definite exit route and the borrower needs to have money quickly.
For some brokers, all they perceive is that bridging is expensive but often the cost is minor compared to the benefits it provides. For that reason alone brokers have a valuable part to play to find out how bridging works and when it can be useful for their clients.
Part of the problem is that bridging gets little or no coverage in the national press, and what coverage there is, is invariably negative. Bridging is designed to fill a valuable need, to help people to get vital funding for a short period of time when they need it to buy a new property, not to put customers in a deeper hole than they already are in, or to put them in a situation where ownership of their home is threatened.
So, what is the solution?
• Brokers should only deal with reputable lenders, such as those who are members of the ASTL
• Lenders should provide broker training – some already do – so brokers can learn more about what bridging can offer their customers
• The consumer press should provide informative articles, which will increase customer (and broker) awareness of the bridging lending market
Benson Hersch is CEO of the ASTL