London Credit

Broker dialogue is crucial for borrowers moving to plan B



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Speak to anyone in the specialist market at the moment, and you’ll get a similar story: the desire from investors to purchase property — whether with the intention of doing it up and selling it on, or retaining it for the long term — is as strong as ever.

That ongoing demand has been a big factor in the enormous house price growth seen last year. However, positive intentions only get you so far with the state of the market now, meaning investors need to be flexible enough to adapt their plans.

You need a plan B

All advisers would have had plenty of cases where the borrower’s initial plans have changed before the project was completed. It may be that they picked up a property with the intention of refurbishing it and selling it on, but the work is taking far longer than planned, so they need to switch their funding arrangements.

This is certainly not unusual at the moment. The Federation of Master Builders (FMB) has recently warned that the construction industry is struggling in the face of soaring materials prices and skills shortages, all of which are inevitably causing delays to projects, making them more costly to boot.  

There are other times when an investor has to change course, too. For example, it could be that movements in the housing market have meant that selling it on for a profit is no longer viable, and so they need — or simply want — to hold onto the property as an ongoing BTL investment.

With Zoopla reported that rent increases were at a 13-year high, with demand in some cities doubling,  BTL may seem like a better prospect than selling on for a quick profit.

It’s good to talk

The best brokers know that there is far more to the advice process than simply finding a competitive initial rate and then leaving the client to get on with it. In reality, brokers often work more like partners on a project, not just helping the investor secure the funding they need at the outset, but playing a role all the way to the conclusion.

Maintaining a regular dialogue with clients is important, so that you are perfectly placed to help should those plans need to change. And even if things are going entirely smoothly, keeping up those lines of communication demonstrates to the client that you are invested in them and their work, improving the chances that they will remain a client for the long term, coming to you with their funding needs in the future.

At London Credit, we encourage this dialogue, and we are always part of it throughout the term of the loan. Constant communication can identify potential issues that may delay exit, and thus we aim to proactively explore solutions to support our clients.

While bridging and development finance is classed as short-term, the job of a broker on these cases is anything but that. Brokers put in the work over a lengthy period to keep in touch with their clients and help them should they need to change course — and so it’s only right that lenders not only deliver product ranges that can help the clients do just that, but also reward brokers for maintaining that channel of communication.

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