Christian Faes, Managing Director of Montello Bridging Finance

myintroducer.com catches up with Christian Faes, Managing Director of Montello Bridging Finance, a principal bridging finance lender in the UK.

Related topics:  In The Spotlight
Millie Dyson
28th June 2011
In The Spotlight
myi:  How are you finding the bridging finance market at the moment?

It is certainly interesting times in the bridging finance market at the moment.

There are a number of smaller private lenders trying to access the returns that are perceived to be available through bridging finance, and there are also some larger industry names trying to get in on the action.

At Montello, we feel quite fortunate to have entered the bridging finance market when we did, three years ago. We entered the market with no bad loans or legacy issues from the credit crunch, and also at a time when arguably the property market was at the bottom of the market.

We have slowly developed our internal processes, and our loan book, at a very organic and sensible pace. This has allowed us to develop some good relationships with brokers that were being let down by other short term lenders.

myi: Are you seeing the general mortgage improving for borrowers?

In terms of the general lending market, every day we are seeing borrowers that should be able to easily obtain a mainstream mortgage from a high street lender. However they are struggling to get finance. If they are able to get finance, it is just taking a very long time.

We do not see any evidence at all of this easing up at the moment. At the same time, in the current market there are a lot of potential opportunities for property investors.

So the need for bridging finance is coming from the constrained credit market, and the fact that there are more opportunities than before – so the whole market situation is circular in a way. This is feeding directly into the bridging finance market.

myi: It seems that the market is quite competitive, is that putting pressure on lenders to reduce rates? How else is the competition having an impact?

There is some increased competition in the bridging finance market at the moment, which we view as largely positive.

What it has served to do is essentially raise the profile of bridging finance as a viable option for borrowers, and essentially bring bridging finance and short term lending into the mainstream mortgage market.

The more that brokers and intermediaries (and borrowers for that matter) hear about new bridging finance companies coming to the market, and hear about bridging finance companies generally, the more people start to realise the possibilities available through short term finance.

I think they start to feel more comfortable generally with bridging finance or a short term loan as an option. A number of years ago, there may have been a certain negative connotation to someone taking out a bridging loan. Instead today it is becoming increasingly commonplace which is definitely a good thing.

In terms of the impact of competition on pricing, we see that some bridging finance companies are advertising low interest rates. Experienced brokers can generally see through this, and we get a lot of feedback from brokers that most lenders aren’t really lending at those rates.

If they are, it is generally for a deal that is at a very low LTV, and probably should have been done through a private bank or some other lender like that.

We think that bridging finance as a business is largely built on relationships. We have brokers that bring transactions to us because they know that when we say that we can do it, we just do the deal. We don’t change the terms of a deal at the last minute and if we have funds available and like the deal, then it will proceed.

Speed and service, and knowing that the deal is actually going to complete, is more important than rate in most instances. This is particularly the case with bridging finance because most loans are for a short period of time, so that rate is arguably less important than delivering and delivering on time.

myi:  Do you view mortgage introducers as an important part of your bridging finance business?

This is an interesting question. We certainly do think of mortgage brokers as important partners with our business. We value the broker relationships that we have and are actively trying to form new ones.

The number of mortgage brokers operating in the market is considerably less than a few years ago and the reality is that mortgage brokers that are still around, have gone through a very difficult few years. The brokers that are still around are generally the best of the best, and are quite good at what they do.

We have head some other bridging finance companies try to effectively cut-out the mortgage broker, but offering dual pricing or pricing that would infer that they are wanting to attract deals direct from end borrowers.

We also have peers that we have spoken with that have outright said that this is their strategy. However we are a streamlined business, and we understand the value that a good mortgage broker can bring to a deal.

In most cases the mortgage broker is a very important part of ensuring that a deal runs smoothly and we can stick to a fast turnaround, which is very important with bridging finance.

At Montello we are wanting to expand our introducer referrer base, and we have a number of relationships with law firms and accountancy practices in the City that do refer us a lot of bridging deals.

However, in terms of volume of deals, mortgage brokers are an absolutely essential part of our business, and we intend on trying to continue to forge quality relationships with the mortgage broker community.
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