The benefits of using the right specialist finance broker.
Being a Career Private Banker prior to joining the Affinity Group, I have worked with many brokers over the years. Mostly my experiences were fantastic, I formed many longstanding relationships. Sadly, I also had a few experiences that now I am on the other side of the transaction have kept me up at night wondering how the ‘broker’ added any value to a transaction.
The primary objective of any broker is to have a constant and evolving knowledge of the market they deal in. Whether that be in the residential space, buy to let, or, in my case, commercial finance, development finance, short term lending and funding HNW transactions. I truly believe that in order to be able to do our job properly brokers should be suitably qualified and have access to the entire market, which is sometimes not the case.
Our value as brokers, comes from the relationships with have with our lending partners coupled with our knowledge of how to package and structure a credit submission to a lender to ensure the client has the best chance of securing the funding to make their plans a reality. Just as importantly though, its to ensure they are introduced to the appropriate lender and being charged fare rates.
Specialist finance being technically unregulated (in most instances) means that there are some brokers/introducers out there that do not have the relevant experience and relationships and in some cases are just not fit to provide advice around borrowing. In these instances, clients are introduced to a lender that is not fit for purpose, simply because it is the only lender the introducer knows ! This could mean that a client could be paying excruciating interest rates and charges where there could be a far better option.
I recently received a call from one of my accountant introducers. Luckily, he had spotted that one of his clients may have taken the wrong advice from an unregulated introducer who was pushing him to take a bridging product to purchase his new home. After undertaking a full fact find to give the client a second opinion it very quickly became apparent that he was eligible for a standard regulated mortgage. This relatively simple case went dangerously wrong via the previous broker simply through their lack of knowledge and lack of authority to trade with regulated lenders. Ultimately, it stood to cost the client many thousands in unnecessary fees and interest.
When a client brings his broker a scenario, through theirs and the teams experience we usually know the top 3 to approach immediately for service, best rate available and criteria specific to the case. On the occasions where this is not the case it’s our job to go to the market and hunt down the best rate for the client. When undertaking these exercises, its staggering how one lenders charging structure can vary to another. A live case I have right now has seen one bridging lender offering terms of 1.5% per month with a 3% arrangement fee vs another lender that, for the same deal, would provide terms at 0.75% per month with a 1% arrangement fee. On a loan of ONLY £250,000 the difference in costs across the 2 is for a 1-year term is £27,500. I have no doubt that transactions such as this take place daily. Had a qualified, reliable, independent broker been involved so many of these cases can be avoided.
Choose your professional partners carefully and please do always check their credentials, experience, and their trading authority. I would also recommend you use a broker that is authorised and regulated by the FCA.
Rick Marshall
Director, Specialist Finance
