It’s not just the mortgage offers taking longer. The whole property chain is moving more slowly than usual – from surveyors to conveyancers, creating a bottleneck of pipeline cases.
It would be frustrating under any circumstances, but particularly when your clients need to complete before the stamp duty deadline.
That’s still do-able, but it’s tight, and as each week passes it becomes more of a challenge.
However brokers can still make choices that will help get your cases over the line in time.
It’s vital you consider lender service levels when you source a mortgage right now, but you might also want to consider another, faster route to completion.
Short-term finance solutions
Bridging loan applications can realistically move to offer in days, meaning the valuation can be instructed, and conveyancing process begun.
This is particularly useful if your client is a portfolio landlord, for example, since their mortgages take longer to process.
You need to get together a lot more information to show a buy-to-let mortgage lender your client’s entire portfolio, so are potentially talking weeks to get to offer.
By purchasing their investment property using a bridging loan, and moving quickly to offer, they would have a much better chance of completing before 31 March.
The bridging loan is a short-term solution, and they could still switch to a buy-to-let mortgage down the line. There’ll be some extra costs of course, but they might be outweighed by the potential stamp duty savings.
The lowdown on bridging
If you’re not familiar with bridging finance, don’t worry. The sector is competitive, transparent, and diverse, so you should be able to find a solution for your client.
It’s not so different to arranging mortgage finance, in fact it’s arguably easier. You can go directly to a lender or use a specialist distributor to find the right case for your client.
You won’t be expected to provide lots of new information on top of what you already expect to get from your client for a mortgage.
Each lender is different, of course, but generally bridging lenders use experienced underwriters that weigh up the applications on a case-by-case basis.
Most lenders will offer up to 70 per cent loan to value (LTV) and clear fees, which can be paid upfront or added to the loan.
They can vary across the market, but you can expect to pay a valuation fee, legal fees and an arrangement fee, as with a mortgage.
Loans can be arranged from one to 24 months and applications usually move to completion significantly more quickly than mortgages.
At the end of the agreed term your client redeems the loan by either repaying what they borrowed or refinancing, to a long-term mortgage or another short-term loan if that’s more appropriate.
By speeding up the time taken to offer, a bridging loan gives you a much better chance of getting your client back on track for a significant stamp duty saving.