Flexibility. It’s a word we hear a lot in the commercial mortgage market. But what does it really mean, and how important is it for lenders to be flexible on time-sensitive short term loan deals? Flexibility comes in many forms and it’s something brokers should consider carefully when approaching a lender on a time sensitive STL case – it could mean the difference between a successful deal or a missed opportunity.
Here are the four golden rules on flexibility which we believe every lender should offer…
Flexible support and decision making
Slow response times, unanswered phone calls and a lack of support on time sensitive or complex deals are a real bugbear for brokers. Brokers should look for a lender whose teams are flexible enough to deal immediately with a case that needs rapid response.
At Shawbrook, our sales team is always available on the telephone if a quick response is needed. When it comes to decision making, our mandated lending managers approve cases in-house, and use an in-depth understanding of each client to make fast, common-sense decisions. We never shy away from the more challenging cases. In fact we thrive on them.
Speed
It goes without saying that speed is of the essence when it comes to using short term finance. A good lender should not be rigid in the time they take to process applications. At Shawbrook, for example, our typical turnaround times are 24 hours, but if a broker comes to us with a time sensitive case, we’ll pull out all the stops to make the deal happen. We have completed STL deals within four working days and, while not every case can be completed this quickly, we will continue to deliver on the tight timescales required in this market.
Product range and terms
No two investor clients are the same, and brokers should look for flexibility in the products and terms offered by a lender. Specialist lenders tend to be better placed to deliver this flexibility because we use agile systems and processes that are highly responsive to the needs of the market.
For example, we chose to remove our minimum term requirement across all short term products following feedback from our brokers. This means that if a client manages to execute their plans for the property quicker than planned they can exit at any stage without any minimum interest charges.
Flexibility shouldn’t stop at the end an STL deal. When we launched our short term product range last year, we wanted to enable our brokers and clients to work with one lender in a flexible way for all their property investment needs.
For example, we could provide a short term loan to purchase a property and complete some refurbishment works, before switching the client onto a longer term option if they choose to hold the property for investment, releasing some capital in the process to move onto the next project.
Price
Historically, only expensive bridging options have existed for clients looking for speedy acquisition, but now short term loans are enabling investors to maximise their return with cheaper pricing thanks to thorough underwriting and legal due diligence.
As a result, the opportunities for brokers in the short term loan market are huge – and growing. So our final thought on flexibility relates to price. We’re proud to say that Shawbrook has led the way when it comes to STL pricing, and our standard short term bridging loans start from just 0.65% per month – the cheapest rate in the market.
However, we don’t use gimmicks to entice intermediaries to a deal. We’re focused on building longer term relationships with our brokers. We know time sensitive deals require flexibility from brokers, so this year we also made commission changes on our STL products to reflect the amount of work that a broker has to complete in very tight timescales. The standard commission paid on our STL products increased from 1% to 1.5% on all loans up to £2.5m.
Investors are increasingly using short term finance to leverage and make their money work harder, and to take advantage of time sensitive opportunities which come their way. The opportunities for brokers are there for the taking – but a successful short term loan deal relies heavily on lenders taking a flexible approach and delivering on their promises, from initial application to completion.
Our brokers are vital partners in this process and we look forward to completing many more short term deals with you in 2013 and beyond.
