The bridging finance sector has come on in leaps and bounds in recent years, but I think there’s still work to be done to ensure regulated and unregulated customers are treated fairly.
Whilst regulated loans are secured against a property where a customer or a member of their family will reside and are therefore subject to the same regulation as a residential mortgage, non-regulated products aren’t.
Many unregulated lenders will often advertise products with ultra-low rates and when you see these rates, it’s easy to fall into the trap of thinking that the lowest rate must be the best deal for your customer. However, the devil’s in the detail and when you scratch beneath the surface you’ll often find a different picture. Check how much your customer would have to pay over a 12-month period, including how much they’d have to pay to conclude the loan or if they default. Is the lower rate product actually the cheapest one in the long run? You may be surprised by the outcome.
Here at Precise Mortgages, we aim to treat each and every customer fairly. As a regulated lender, you can expect the same standards whether your customer wants a short-term or long-term product. All of our fees and charges are well set out in our decisions in principle, offer letters and on our website. And unlike some unregulated lenders, we don’t charge high interest rates to defaulting customers, or conceal rates by setting a very high standard interest rate which is discounted if payment is made on time.
Why does all this matter? Well, it matters to customers who might end up paying more for an unregulated loan than they would for a regulated loan, but it also matters to the bridging industry. Practices like this can give bridging finance a bad name, so it’s vital the industry is clear and transparent in the way it does business.
So the next time you’re approached by a customer who needs a short-term loan, it’s worth adopting a ‘regulated’ mindset and investigate all options to ensure your choice of lender and the rate they are offering gives you and your customer the peace of mind you’d get if you were applying for a regulated product.