View more on these topics

How we’re challenging challenger banks

The bridging market has enjoyed an excellent couple of years and, as a result, has seen a succession of new lenders enter the market. That competition has forced all of us to look carefully at how we price bridging loans. Over the past few months we have spent a lot of time on adjusting the LendInvest product range to best meet the needs and expectations of mortgage intermediaries.

Back in June we moved to split our product range into distinct tiers, in an effort to offer brokers and their clients a more granular proposition. A one-size-fits-all approach simply doesn’t work with bridging. Cases come in different shapes and sizes, so you need a more diverse product range to address that.

So we opened up three tiers of pricing. Tier 1 covers the simplest, most vanilla residential bridging cases. It is available up to 75 per cent loan-to-value, which is unusual in the current market. It is the cheapest product too. Because those cases tend to be more straightforward, it is easier – and cheaper – for us to secure the necessary funding for those loans, which then feeds into the interest rate charged.

Tier 2 is built for the more complex bridging cases, such as HMOs or heavy refurbishment cases involving structural or extension work. Because it is more flexible, it is a little more expensive than Tier 1.

Finally there is a commercial bridging tier, which covers any commercial cases brokers bring to us. We have now adjusted the product range again, to make the Tier 1 pricing even more competitive.

The rates we charge on Tier 1 bridging loans have been cut significantly, by as much as 11 basis points per month. As a result, rates begin at 0.64 per cent for a 50 per cent LTV deal, and go up to 0.94 per cent for the 75 per cent LTV bridging loan.

By cutting the rates so significantly, we are moving in line with the very best deals from the challenger banks.

We are also fiercely ambitious about our future prospects. We have seen terrific growth over the past three years but we aren’t interested in resting on our laurels. We want to be the first choice for intermediaries up and down the country when they want short-term property finance. To do that, we need to put up a challenge to the challenger banks, not just in terms of service but for price too.

As we have built up our record as a successful business, we have been in a position to attract a deeper pool of capital than ever before. One of our defining characteristics is our diverse range of funding sources, encompassing direct banking lines, the two managed funds we run and, of course, our online investment platform, which allows retail investors to put their money into property loans.

That capital base gives us room to move on the rates we charge on the Tier 1 range.

It’s worth remembering that, in the bridging market, intermediaries look for more than just the lowest rate for their clients. We surveyed brokers earlier this year to establish what they felt were the most important factors when deciding which lender to use. They were unanimous in picking fast turnaround times and support from business development managers, ahead of the interest rate charged. Our business is underpinned by personal relationships and the ability to make decisions based on commercial understanding and acceptance of risk. All brokers will appreciate that because, in bridging cases, there is often a non-standard feature that needs a pragmatic solution to get the case over the line.

With short-term lending, time is of the essence – brokers want to deal with reliable lenders that they know can deliver the funds swiftly and will offer round-the-clock support. That has become even more important since Brexit, with some lenders looking to pull back on their activity.

We enjoy an excellent reputation for the speed and efficiency with which we deliver the required funding, so combining that with an even more competitive pricing structure is a proposition that we believe is hard to beat.


Tracie Pearce

Comment: Best comparison tool? Brokers

As the landscape gets more complex, clients need help to understand it – and brokers are crucial to that process Not so long ago, the only way to get a mortgage from HSBC was to deal with us directly. But the industry has evolved. The intermediary market is growing significantly with around three-quarters of first-time […]

In My Opinion: Sub-prime 2 – a new dawn

Borrowers with credit blips represent a great opportunity because they really need – and value – professional advice Just when you thought it was safe to go back into the water, sub-prime is back. Well, that is the headline some commentators want you to believe. The truth is the market never disappeared – but it […]


Vida Homeloans partners with nine packagers

New interemediary-only specialist lender Vida Homeloans has partnered with nine packagers distributing its range of residential and buy-to-let mortgages. The packagers joining the panel are Active Investments, All Types of Mortgages, Brightstar, Complete FS, Connect for Intermediaries, The Mortgage Trading Centre, Platinum Options, Solent Mortgage Services and TFC Homeloans. They will join existing members 3mc, […]

Top seaside property hotspots revealed

Like to let beside the seaside? The latest research from LendInvest looks specifically at coastal towns to find which areas offer the top average rental yields to landlords. Where are the top seaside postcodes for landlords? The interactive map below looks at the highest rental yields along the UK coast. According to the data, Hull, […]


News and expert analysis straight to your inbox

Sign up

Why register with Mortgage Strategy?

Mortgage Strategy continues to be the market-leading B2B mortgage publication in the UK, and provides trusted, independent insight with the aim of helping, promoting and analysing the latest developments for mortgage professionals.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Mortgage Strategy Events
Be the first to hear about our industry leading conferences, awards, webinars and more.

Research and insight
Take part in and see the results of Mortgage Strategy's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now