Many lenders in the specialist sector have recently reported record periods of business activity and are looking to expand their presence beyond brokers who solely specialise in bridging, to the mainstream intermediary market.
Network heads, mortgage club bosses and mortgage brokers, who attended the Specialist Lending Senate, were asked by bridging lenders what would make them more comfortable when considering the merits of a bridging loan for their client.
Some believe greater regulation in the sector would clarify grey areas for brokers while others said they would like to see a comparable loan illustration, like the ESIS, issued as standard by lenders.
“Both the secured loans and bridging market have been shrouded in mystery for many people on the outside looking in over the years,” said Martin Reynolds, chief executive of Simplybiz Mortgages.
“We are seeing the changes in the secured loan market already, post-MCD (Mortgage Credit Directive) so anything similar to an ESIS type of document that bridging lenders could issue would help more intermediaries consider the market.”
He said that a number of lenders would need to offer a consistent document so that it could be used by advisers to compare and contrast the terms on offer.
While there is currently no specific documentation required for non-regulated bridging loans, Rob Jupp, chief executive officer of Brightstar Financial, said many of the leading lenders in the sector already produce a document similar to an ESIS to ensure transparency of fees and charges.
“Some lenders won’t, simply because they aren’t required to and a small minority of this group wouldn’t have a vested interest to be more transparent as their fees and charges may be excessive,” said Jupp.
“In the past three years the short-term lending market in the UK has improved immeasurably with rates and fees reducing with a general improvement in client satisfaction.”
He said a “decent” intermediary will already have bridging in their span of advice and will be able to accurately steer a client to the best outcome suitably, with or without an ESIS document.
Benson Hersch, chief executive of the Association of Short Term Lenders (ASTL), said a unified document for all bridging loans, such as an ESIS, is a subject that has been raised many times before and that the body encourages transparency in the sector.
“The bridging industry, whether regulated or unregulated is diverse, and the requirements of different customers are varied,” said Hersch. “There are many aspects for brokers to take into consideration before they place business – interest rate alone is not the only factor in this decision and often may in fact be far less important than the flexibility of the loan arrangements.”
He added: “It is not the ASTL’s policy to impose this type of document on to members. However, what we do require is that the offer document is as clear and transparent as possible to enable brokers and their clients to make informed decisions.”