Considering a bridging loan broker for your financing needs? It's a common choice, but you might be wondering if it's the right move for you. After all, do you need one? And what exactly are the pros and cons of teaming up with a broker?
This blog delves into these questions and more, offering you insights to help you make an informed decision.
What does a bridging loan broker do?
A bridging broker serves as the intermediary between you and the lender. They undertake the responsibility of sourcing a suitable product for you and liaising with the lender on your behalf.
Essentially, their role is to streamline the process of securing a loan, making it more convenient and straightforward for you.
What are the advantages of a bridging finance broker?
Working with a broker can offer several advantages, including:
- Wide range of lenders and products -You will get access to a diverse range of lenders and products, which may increase the likelihood of finding a solution that aligns with your goals.
- Exclusive rates and products - May gain access to exclusive rates and products that may not be available if you go to the lender yourself.
- Market expertise - Brokers stay updated on the rapidly changing market, sparing you the time and effort of having to research these different trends yourself.
- Potential for reduced stress - Using a broker may also alleviate some of the stress often associated with securing a loan because they will take on the hard work for you.
What are the disadvantages of a bridging finance broker?
Some of the main downsides of using a broker include:
- Fees - They usually charge a fee for their services, which may get added to your loan and therefore will accumulate interest. This means you might end up owing more money in the end.
- Reputation - If you pick a broker with a bad reputation or poor reviews, it could make getting a loan more stressful and complicated. You might feel less happy with the service compared to going directly to a lender.
- Whole of market - If you are not using a whole of market mortgage broker, they might not offer all the top products or collaborate with your preferred lender. This might mean you miss out on a better deal elsewhere.
Do I need to use a bridging loan broker?
Well, the short answer is no, you don't have to if you're not keen on it. You can always go straight to a lender for help. This approach may sometimes be more cost-effective since bypassing a broker means avoiding their fees.
However, if you decide to go down this route, it's worth doing a bit of research to find different lenders and see which one offers the best deal for you and is likely to accept your application. Sometimes, not every lender will be the right fit for you. That's why shopping around and finding different providers can pay off.
Also, some lenders prefer working with clients who come through their broker partners. This is because brokers help to do some of the background work for the lender. Therefore, sometimes they will give exclusive rates and products to brokers that you wouldn't find if you went directly.
So, while you have the option to skip the broker, it's worth weighing up both sides before you make a decision. Going straight to a lender might mean fewer fees, but going through a broker could lead you to a better product. It's all about finding what works best for you, so take your time and decide what feels right.
To find out more read our blog on the 'differences between lenders and brokers'.
What to look out for when choosing a bridging loan broker?
When selecting a broker for your application, there are several factors to look at. Some of the key aspects to evaluate include:
- Reviews: Take a look at what others are saying about the company. It's a good way to get a feel for their reputation, and whether they provide good quality service.
- Fees: Make sure to check out their fees so you know exactly what you're getting into.
- Timeline: If you're on a tight schedule, it's important to find a broker who can keep up. Look for someone who can work within your timeframe.
- Services: Be sure the broker offers everything you need. If not, it might be worth looking elsewhere for someone who can meet all your requirements.
Find out more in our blog on 'what to consider before choosing a mortgage broker'.
What fees do bridging loan brokers charge?
The fees can differ from one broker to another, so it's essential to explore various options to find a suitable match for your budget.
Some brokers might charge a flat fee for their services, meaning it stays the same no matter how big or small your loan is. Others might take a percentage of the loan amount. It depends on the broker you choose. So, take your time to do some research and find one that works well for your needs.
What will the broker want to know about me?
They'll need to ask you some basic questions to get started, like what you need the loan for, how much you need to borrow, and how long you'd like to borrow it for. They'll also want to understand your financial situation, so don't be surprised if they ask about your income and run a credit check to see your borrowing history.
You'll also need to provide details about the property you're using as security for the loan, including its value and condition.
However, perhaps the most crucial question they'll ask is about your exit strategy. This is important because it has a big influence on whether the lender will approve your loan or not. They need to know how you plan to repay the loan and will be reluctant to proceed if you don’t have a clear and viable plan.
Summary
In summary, deciding whether to work with a bridging loan broker is a big choice, but it doesn't have to be overwhelming. While a broker can offer valuable assistance, it's essential to consider what aligns best with your needs and preferences.
So, whether you're leaning towards partnering with a broker or exploring other options, take your time, research thoroughly, and trust your instincts.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
