The pandemic has affected the ways in which banks and other traditional finance companies operate and communicate, as delays increase. Mortgage products have been disappearing from the shelves. High street lenders have also become more risk averse and are reluctant to take on complex cases. It appears they are struggling to keep up with the rising demand from borrowers, which in turn means that borrowers are struggling to complete on their purchases.
However, regardless of this, the UK property market has been booming.
To bridge the gaps made by high street lenders, brokers and borrowers are starting to look towards alternative forms of finance. Specialist lenders have therefore taken on the challenges set by Coronavirus and are hitting them head-on, to help those being let down elsewhere.
Despite lockdowns and government restrictions, specialist finance lenders like MFS are maintaining the same high standards and ensuring the property industry can continue to move.
Changing the relationship
The relationship between borrower and lender has changed. In difficult times, people want to engage with companies that they feel have their best interests at heart. Not only do they need professional products and a high-level of service – they appreciate personalised and tailored engagement too. They want to feel a connection.
Whilst we are currently living in an increasingly digital environment, and it makes sense to embrace technology to help overcome the challenges of social distancing, technology should be utilised to enhance the borrower and lender relationship, not replace it.
Here at MFS, we take a personal and hands-on approach. We`ve adapted to the new normal and integrated sophisticated technology into our current service, to help encourage interaction and engagement. We now have an advanced CRM system in place. From this we can take part in online conferences and workshops to help educate brokers and borrowers about bridging finance. We can answer questions, and tailor our services to suit their needs, whilst simultaneously staying connected through these difficult times.
Invest in transparency
When investing in UK property, borrowers like to learn more about their lenders funding lines before committing.
Why? There are 2 key reasons:
1. In-house funds can be key
Having in-house funding available means that loans can be deployed quicker than other lenders. Funds can therefore be received in a matter of days rather than weeks. Here at MFS, we can ensure the money is in your account in as little as 3 days.
Credit lines are provided by investors. As investors put forward their own money, they only deal with lenders in which they place their trust. Part of this trust is knowing that the lender will only lend to borrowers with clear exit strategies – regardless of how complex the circumstances surrounding the requirement may be.
Some specialist lenders have struggled to overcome the challenges posed by the pandemic however. In the initial stages of the first UK lockdown, the UK property market came to a halt. This caused some lenders to overpromise, and then under deliver when it came to completing. Staying open and transparent with clients is fundamental in the current market, to ensure the safety of the client`s property, the investors funds, and the future of the lender themselves.
We have been lending throughout the pandemic, as we continued to use our upfront underwriting approach. Providing rates from the offset and underwriting from day one to secure all the facts and deal with any issues well in advance. Here at MFS, we initially set up £60m bridging fund to help those I need of emergency funding due to lenders falling through from the pandemic. Most recently, we secured a new £150 million credit line. The funding will be used to support residential and commercial property transactions.
Understanding the fundamentals
The way that lenders engage with borrowers, brokers and lenders is changing. Nonetheless, the underlying requirement of trust between parties remains the same. Lenders who recognise this are best positioned to meet the needs of their clients.