A decade later: 10 things I have learnt about the bridging finance industry over the past 10 years
As Hope Capital celebrates its 10th birthday, our CEO, Jonathan Sealey, discusses how the bridging market has evolved and what he has learnt about the industry, since establishing Hope Capital in 2011.
I am so proud to mark a decade in business and celebrate this tremendous milestone with my team and everyone else who has helped us achieve this amazing accomplishment. Over the past 10 years, we have worked with many brokers, clients and stakeholders, who have helped us go from strength to strength.
Throughout the years, there have been many occasions where we have had to adapt to changing market trends, whether it is placing a bigger emphasis on certain products or specific lending areas. In particular, the unprecedented nature of Covid-19 required an innovative response, where we had to quickly devise new ways to operate, although our fundamental approach remained the same: what is the demand in the market, and how can we deliver it?
There is no doubt the past decade has been a rollercoaster however, I would not have wanted it to be any other way.
Here are 10 lessons I have learnt over 10 years:
1. Delivering an excellent service outweighs everything else.
The bridging market has developed considerably over the years, transforming from a limited number of lenders operating in a relatively small, niche industry to now, where it comprises a growing force of specialist lenders competing in a highly competitive market. The battle between low rates and an excellent service has subsequently become a major talking point, especially following the implications of the Covid-19 pandemic.
While some lenders focus on offering low rates, others focus more on delivering speed and an efficient service. Naturally, low interest rates are a great benefit to the borrower if the circumstances are right. However, if a lender only focuses on providing very low rates and while this might bring in a lot of enquiries, it will test the lenders product transparency, credit risk appetite and service levels, with enquiries not converting as strongly as they had first hoped. Ultimately, cheaper rates should not sacrifice service quality or product solution. The majority of the time, savvy brokers are looking at lenders in the context of the bigger picture i.e. to support their clients, with a high-quality service, where they can provide transparent and innovative products, which match their customer’s needs and affordability, and most importantly, can also be delivered on time.
2. The appetite for bridging loans will only continue to increase.
With more and more bridging lenders establishing themselves within the marketplace, the number of brokers and borrowers considering specialist finance as a leading option, continues to grow. It is therefore important as lenders, that we continue to ensure we can keep up with the demand, whether that be investing in the right people, technology or processes. It is fair to say that it’s a very exciting time for the industry!
Nevertheless, the specialist lending industry remains a specialised area. The best lenders will take the time to walk through the bridging finance processes with the broker, ensuring they have a full understanding of what is involved and what the best option is for their client.
3. Select the right people.
People in business will ultimately determine the success or failure of the company. There are various factors which contribute to being successful, e.g. having a solid strategy, efficient processes etc. However, it boils down to the people within the business to actually execute the strategies and processes to make the company successful. Company culture has always been a priority at Hope Capital, where I want the team to enjoy coming to work and working together.
4. The reputation of bridging is changing.
For many years, the bridging finance industry has been misunderstood. It has previously had a reputation for being expensive, risky and over-complicated, but thankfully, owing to lenders, brokers and stakeholders educating those who are still unsure about specialised finance, the benefits and value of bridging are now overshadowing any negative connotations. There are several reasons brokers and borrowers should consider bridging loans. Bridging loans provide access to short-term finance which is provided extremely quickly to meet the individual needs and requirements of the borrower.
5. Being able to adapt is essential.
The past 18 months has taught us that at times, we can experience unexpected events or circumstances. However, the ability to anticipate changes and not panic when things don’t go according to plan, is crucial. In bridging, we have had to adapt to several changes over the years, whether that be the need to introduce new processes, or a demand in a specific product area, to name a few. As a result, it has and continues to be our priority to listen to the feedback of brokers and borrowers on what they want to see in the market and how they want it to be delivered.
6. Refurbishment projects are on the up.
Bridging loans are commonly used for refurbishments projects as often the property is unmortgageable, or because the developer is looking to find a way to raise extra money to renovate the property and sell it on.
There is no doubt the number of investors and developers focusing on refurbishment projects has spiked significantly over the course of the last year and we predict this trend will only continue to grow. This is likely owing to the new level of opportunity which arose for property investors and developers at the beginning of the Covid-19 pandemic.
In addition, it is fair to say the adoption of remote working has increased in recent years, however as a result of the Covid-19 pandemic and the subsequent lockdown restrictions, companies of all types had no choice but to adapt to having staff work from home, resulting in there now being a huge demand for properties which not only accommodate, but can facilitate remote working.
7. Transparency and consistency are always expected.
Transparency and consistency should be a top priority for any bridging lender. Of course, speed is crucial in the bridging process, however if a lender is not transparent or consistent, they will not be able to build and maintain relationships with key figures in the industry.
At Hope Capital, we are run on strong family values with an ethos of doing the right thing. This therefore means we are transparent and clear about everything involved in the process from the get-go. This ensures brokers can effectively deliver for their clients without any unexpected requirements. Ultimately, it is no point making promises we can’t keep.
8. Auctions will continue to be a key driver in demand.
In the last year particularly, the surge in homes being bought at auction in the UK has increased significantly. If a purchaser is looking to buy a property at auction, they will initially need a source of finance that is fast and reliable, which is why short-term bridging finance is a natural choice.
It is quick to secure, convenient, gives the borrower fast access to the funds they need and provides flexibility. This is why we have placed a dedicated emphasis over the years on ensuring we can provide tailored solutions to help those who are looking to buy at auction, to meet their deadlines.
9. Technology will continue to play its part.
Technology has played a crucial role in the specialist lending industry, where the advancement of processes and technology have made a huge impact on how quickly buyers can reach completion. Investing in technological innovation is becoming more and more integral in the bridging finance market, which is why we will continue to utilise new processes to improve the customer experience going forward.
10. The bridging market is resilient.
The past 18 months has taught us all that we never know what is around the corner, but no matter what challenges the future holds, I look forward to finding a way to overcome any barriers we may face. If my 10 years as being a business leader in the bridging finance industry has taught me anything, it is that the industry is resilient.
We have faced several challenges, but always found a solution. I feel very confident that the bridging sector will continue to play a vital role in the economy, by providing customers with access to fast finance, in a responsible and sustainable way.
Hope Capital initially began as a one-man journey, when I discovered an opportunity in the market to create a specialist, transparent, quick and flexible bridging lending company. 10 years on, I would never have imagined the company would be where it is and achieving the success it does today. I am so proud of what we have achieved as a team, so with confidence I can truly say, bring on the next 10 years!
Hope Capital is dedicated to providing excellent service and support to brokers and their clients from initial enquiry through to completion. For the latest updates from Hope Capital, including job announcements, follow the firm on Twitter and LinkedIn.
