Bridging loans may look like the easy option, said Ian Gray, mortgage manager at Largemortgageloans.com (pictured), with a one-page application form and 1-2% commission, but warned they are not always the right option.
One client buying a £3m house from her partner was being offered the property at the discounted price of £2m. Through lack of experience, a previous broker referred the client to a bridging lender instead of a private bank, costing the client £20,000 in fees and interest before Gray refinanced the client on to a mortgage with BNP Paribas.
“Brokers should use bridging loan companies wisely. You never want to leave clients stuck on a bridge. Bridging serves a purpose when you have an exit strategy, but you have to know what you’re getting into,” he said.
Adrian Bloomfierld, chief executive of the Association of Short-term Lenders, said there will always be brokers who lack professionalism.
“However, most of the brokers that do business in this sector are members of trade bodies the NACFB or the AOBP, which have been set up with the express purpose of improving professional standards.”
The ASTL has roughly 25 members and Precise Mortgages became the 8th member to join the trade body so far this year.
Have you come across a similar cases, where clients have been wrongly referred to a bridging lender?
Email the editor at vicky.hartley@incisivemedia.com
