Brian believes the problem was highlighted by the increase in the period of time allowed for the completion of auction purchases.
“The auction houses recognised that a loosening of the rules was needed if buyers were to be confident to bid,” said Brian.
“However, even six weeks often is not long enough and bridging loans are often taken until permanent finance arrangements are completed.
“This use of bridging finance does not just apply to auction purchases, but for all property finance transactions, including refinance of existing loans.”
In order to counter the uncertainty and delays, Brian thinks borrowers and their brokers can take action by following a series of useful tips.
The first is to provide good information to the lender from day one and telephone to discuss the outline of the proposal with the proposed lender to establish their interest in the transaction and ensure it fits their criteria.
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Once a lender has been selected, Brian believes brokers should prepare an information package which covers the full story of the transaction, its purpose to the parties, the properties concerned and then make sure the lender’s application form is properly completed.
Brokers and borrowers are also encouraged to volunteer at an early stage additional data such as the borrower’s CV and proof of income or a copy of accounts, if it is a limited company.
Then, unless you have first agreed to do so with the lender, do not instruct a valuer as your choice may not be the same as the lender’s.
If the property is being purchased, a link to the agent’s details would help as would the previous valuation if it is a refinance.
For lettings, brokers and borrowers are encouraged to provide a summary of the terms, which include names of tenants, rent paid and expiry date.
Finally, Brian urged brokers to make sure the borrower has chosen an efficient solicitor – a firm with a few partners or more, who set about obtaining searches and preparing a report on title on day one.
Brian warned that when this is left until after a credit decision it delays the drawdown and felt the credit process and legal preparation can happen simultaneously.