Bridging can offer solutions in the race before the stamp duty deadline – but are you ready?
Jason Berry is group sales and marketing director at Crystal Specialist Finance
Let us start with some positives. Despite the market being closed for weeks earlier in the year, many advisers will end up writing more business in 2020 than in 2019.
This is further enhanced as the best ever house price values have contributed to excellent confidence with both buyers and sellers.
However, despite unprecedented transaction opportunity, I’m extremely nervous about what the immediate future holds for many customers and advisers.
Whilst advisers have incredible demand to service customers, a dysfunctional application to completion process currently exists and is arguably the worst I have personally seen in over 25 years.
Fuelled by the stamp duty deadline, which sits ominously on the horizon, I do not see much changing in the coming months.
As further context, L&G Mortgage Club have recently suggested to their adviser distribution that it will take more than 120 days to apply and complete on a mortgage request and more worryingly property data firm TwentyCi also indicated that over 365,000 mortgage applications will now miss the 31 March stamp duty deadline.
Unfortunately, a day rarely goes by without advisers now experiencing a lender worsening their turnaround times and this is likely to continue up to (and beyond) Christmas.
I know there are always exceptions, and at Crystal we have a few lenders really bucking trends, but the broader reality is that ten days plus to review post has become the new norm in both residential and specialist lending spaces.
Ultimately the overarching current sector position is simple…if a residential or specialist mortgage application is not already in with a lender then clients should forget any hope of receiving the tax savings of up to £15,000 – mortgage advisers should therefore be managing expectations accordingly but…there is hope and a genuine solution is available with Bridging finance and I would urge advisers to consider now.
Irrespective of sector conditions, bridging finance provides speed and can help customers bypass some of the established residential mortgage operational processes.
As a product bridging finance is misunderstood by the majority of advisers operating in our sector, and further education is definitely needed.
Experts like Crystal must therefore step up to inform and assist so advisers are much more comfortable recommending this product to their customers.
Very encouragingly, and maybe stimulated by increased webinar content being produced, recent weeks have seen a surge in advisers contacting Crystal who are now considering bridging finance for the very first time.
We are working hard with these advisers to manage application to completion timelines and are prioritising when speed is critical.
Consequently, our application received to completion timeline averages just 32 days, but it is not uncommon to see Bridging cases complete in less than 14 days. It comes as no surprise to me that most of these cases are either preventing residential chain breaks from failing or alternatively refinancing existing bridging facilities where the commitment to exit has not been met.
I appreciate that many mortgage advisers have not written a bridging case before and those who have, possibly encountered poor customer experience or worse still an unwanted price shock.
By developing knowledge, or partnering with established experts, advisers can certainly deliver outstanding outcomes to their customers plus create funding solutions at incredible speed.
As a final thought, advisers who take the appropriate action now can ensure their customers meet impending deadlines and most importantly the operational barriers, where unwanted delays risk customers missing out on the stamp duty tax breaks can easily be overcome.