By Gavin Diamond, head of finance, Cheval
I was surprised to read the comments of prominent industry experts during the round-table discussion on short-term lending in the latest edition of Mortgage Introducer. The comments made me realise that there is still a lot of misunderstanding around about bridging and the way it works.
It was suggested that short-term lending was a “cheap way of lending money to get the asset” and that many new players had entered the market because it gave them the opportunity to “repossess property on the back of loans that will never get repaid”.
These comments indicate a fundamental misunderstanding of how reputable short-term lenders such as Cheval operate – and it couldn’t be further from the truth.
In any market there will always be rogues who give the rest a bad name, and it would be daft of me to insist that what was suggested has never taken place. But the whole sector cannot be tarred with the same brush. It is a bit like me saying that all policemen are corrupt, or that all builders are cowboys.
Today, many bridging lenders, like Cheval, are FSA-regulated. This means that the principles of responsible lending and treating customers fairly are fully embedded in day-to-day operations.
Many are also members of the ASTL, which has been set up to protect and self-regulate the interests of the sector and to give confidence to all parties who transact business with members.
The unfortunate thing about these comments is that they detract from the really important role that bridgers play.
In the current lending market, where high street lenders are restricting their activity in a number of areas, it is clear to everyone that short-term finance providers are plugging the gap and making a real difference.
Brokers are finding bridging crucial when trying to get finance for their clients, and this has never been more important given the stance of mainstream lenders.
The appetite of bridgers, coupled with their ability to make informed lending decisions on the facts of each case rather than on the number of boxes ticked, has made them an indispensible cog in the wheel. This should be applauded – not derided.
As I have said, in any market there will always be the fringe operators. The onus is on brokers to make sure that they place business only with reputable lenders who fully meet the needs of their clients.
In any industry, your interests are always best served if you go to established players with long track records of providing quality products and service.
