United Trust Bank has introduced a new online portal targeted at the increasing number of mortgage brokers and IFAs it says are seeking residential short-term bridging loans for clients.
The portal, which goes live on 1 October, is designed to speed up the online application process for bridging loans.
It provides brokers with key facts illustrations and documentation, accurate indicative offers and annual percentage rates, and decisions in principle within minutes. Funds can be released within ten working days of application, the lender claims.
Bridging loans are typically required to fund the purchase of a new house where the sale of the existing property is progressing slowly or has unexpectedly met with a hitch.
But bridging loans are increasingly being used to cover the cost of development work prior to re-mortgaging and also buying a property at auction or from developers offering significant discounts for quick completion.
Roger Tidyman, managing director of United Trust Bank, says: “The bridging loan market is fast-paced and brokers need quick, reliable decisions and cost-effective solutions so as not to let their customers down or lose them to other intermediaries. Given that the bridging loan market is estimated at £2.5bn and growing at an estimated 25% per year, there are significant opportunities for intermediaries to gain business.
Tidyman says while there are plenty of lenders in the market, not all specialise in residential property and so decisions take longer as underlying security has to be assessed more closely. He claims UTB’s experience in the residential market and the launch of the new portal will help to address issues such as the speed with which an offer can be made.
The British merchant bank says it can arrange loans taking first or second charges over the new or existing property and will advance up to £1.5m at a typical repayment rate of 0.95% per month.
Tidyman admits the bridging loan sector has suffered a poor reputation in the past with a lack of regulation and high borrowing costs. But he claims banks provide a secure option for intermediaries searching for an urgent, short-term funding solution for a customer.
“As a bank, brokers and IFAs know that they are dealing with a prime lender and can have confidence in UTB’s standards and service levels, Tidyman adds. “The growing number of willing lenders in the market has also reduced the cost of borrowing considerably and we have to offer good rates to compete.”
Sally Laker, managing director at Mortgage Intelligence, says bridging loan finance can be used as a short-term funding solution for borrowers and it is sufficiently important enough for the network to carry a bridging loan finance provider on its lender panel.
But Laker adds: "I can't say we have seen a massive increase in business, Its one of those things that has been around for a long time and there is still demand for it. But there's not exactly a gold rush of demand for these products."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAOnlie
Clarke replacing Balkham
'Deep-dive analysis of client behaviour'
Ways to mitigate April’s increases
The best equity income funds examined