Chat to a team member

Blog

Three risk road bumps to avoid

Matt Smith Matt Smith
Posted on Jun 27, 2019 | in Blog

As Pos always steals the limelight, I thought that I’d have a pop at a blog post this month. And who knows, if it goes down well, perhaps I’ll start blogging regularly. I’m not just a pretty face.

So, as someone on the risk (and not fluffy marketing and sales) side, I thought I’d start by looking at three areas where deals can hit road bumps – and how brokers can avoid them.

Be realistic with your valuations

The first area where deals tend to come unstuck, or at the very least get delayed, is the valuation. Now brokers will typically provide a valuation figure based on their research on websites such as RightMove, the Land Registry or Home.co.uk.

More often than not, these sites will provide a decent guideline for a property’s true value before we instruct our own valuers. But in recent months we have seen a number of transactions hit a wall as there is a huge disparity between the broker’s valuation of the property and the figure we get back from our own valuers.

For example, if a broker comes to us with a bridging finance application that has the property valued at £425,000 and then our valuer delivers a verdict of £375,000, this will understandably cause problems.

My advice to brokers is to be as realistic as possible with your valuation estimate, and at least that way the inevitable road bump won’t arise. More importantly, it will allow you to focus your time and efforts on deals that have a better chance of proceeding. 

Always have proof of a B2L borrower’s deposit to hand

A second area where deals sometimes get delayed is in relation to AML. This is particularly the case with buy-to-let loans through SPVs, where clear and legitimate proof of the source of the borrower’s deposit for the transaction is key.

This information really does need to be provided at the earliest stage possible in the deal, or it will be hard to get the application out of the blocks. So as much as a pain as it can be, don’t skimp on proof of the source of funds.

Be thorough with refurb schedules

A third area where deals can hit a road bump applies to refurb applications and the lack of sufficient information coming across.

When submitting an application for a refurb bridge, always be sure to include a detailed schedule outlining all the work that will be carried out, the various fees and costs payable (contingency, planning and professional fees alike).

Given the intense demand for refurb bridges at present, as professional landlords up their game to keep pace with PRS developments or convert properties into HMOs, this is all the more important. 

More in this section

Lenders charging rip-off default interest rates should be exposed

Jul 05, 2019 | Blog

I posted on LinkedIn a week or so back about a lender that is…

Mark Posniak
Mark
READ MORE

Robert Pires lights up #OctaneCapitalCup during fantastic afternoon of football

Jun 10, 2019 | Blog

Wembley has played home to some of the most astonishing moments…

Mark Posniak
Mark
READ MORE

Refurb loans helping landlords manufacture value

May 20, 2019 | Blog

Refurb bridges, both light and heavy, are becoming the go-to…

Mark Posniak
Mark
READ MORE
Sections
Archive
Twitter
Follow us @octanecapital

5 months ago
@AskAmexUK I love my Amex and want to use it even more with @ImagineCurve! Please bring it back @AmexUK @TheFCA… https://t.co/7D0sTD0BD9

5 months, 1 week ago
RT @mposniak: First 2 pages of the Bridging Introducer feature on @OctaneCapital below where we talk about our plans for 2019 and… https://t.co/CzvQeUBd2R

5 months, 1 week ago
RT @mposniak: Second 2 pages of the Bridging Introducer feature on @OctaneCapital below where we talk about our plans for 2019 an… https://t.co/OtyvK6Ws4z

5 months, 1 week ago
RT @mposniak: Lets not forget about what makes @OctaneCapital's #3rdGen engine room tick. Nice little piece in Bridging Introduce… https://t.co/7TzaDzUUbX

5 months, 1 week ago
RT @mposniak: Delighted to confirm that the 2nd Annual @OctaneCapital #3rdGen #OctaneCapitalCup2019 will be contested on Wednesda… https://t.co/41FYEKOOJd

5 months, 1 week ago
RT @Beth_JFisher: Every other month, @BandCNews magazine will feature one key industry figure sounding out another. For the first iss… https://t.co/ShVUKUm9ub