Poor property valuations are causing bridging loans to fall through.
According to a survey of brokers by United Trust Bank, poor valuations are by far the most common reason for bridging loan proposals falling through (43%).
Valuation issues are significantly ahead of the next most frequent reason which is the customer changing their mind (16%).
Although over three-quarters (78%) of brokers dealing with bridging finance routinely complete more than half of their bridging loan cases, only 13% of brokers said that 90% or more of their bridging loan proposals complete.
Nearly half (49%) of the brokers who responded to the survey indicated that they now charge a fee even if the loan doesn’t complete, and a further 18% are considering introducing such fees.
Alan Margolis, head of bridging at United Trust Bank, said: “The results of this survey highlight more than ever how important it is for brokers to inquire more thoroughly into the details of a client’s property before instructing the valuation.
“For example, simple measures such as carrying out a quick comparison on a property sales website or even looking at the property on Google ‘street view’ might reveal something relevant to the property’s valuation which the client may not have mentioned.”