From our experience, the loan application process is inconsistent and there’s a lack of transparency when it comes to lenders’ criteria, resulting in a high proportion of rejected applications, and a lengthy credit-approval wait if a loan request is accepted.

Frustrated by the fragmented market, builders and developers understandably turn to brokers for help.

Too many variables

However, brokers find this equally difficult, as lenders do not openly share their lending criteria, and the many variables to consider make it impossible to collate and keep track of all that information.

Most lenders work off the GDV plus total costs, and will lend the lower of a percentage of GDV (between 55% and 75%) or a percentage of the costs (65% to 95%). These figures vary depending on geography, property type, building specification and experience requirements — making the variables hard to compare.

Brokers consequently need to regularly update their databases to keep track of the ever-changing lending criteria, pricing/policy variations and new products coming onto the market.

•   Hilltop launches real estate funding and management platform
•   Brickflow unveils new sourcing and packaging platform
•   OnTheMarket teams up with Brickflow

The power of technology

In order to help development finance brokers, we need to give them the tools to easily compare a wide range of lenders via a platform showcasing consistent lending criteria, with a transparent single application process across all lenders (and fees should be the same for direct and broker-led business).

In October, 20 brokers signed up to trial Brickflow for Brokers, which uses algorithms to instantly source loans from over 40 lenders, pairing the right development finance options with the project.

After the preferred loan is selected, a simple application process ensures easy data and document upload, to which lenders can be invited to login and view. Credit approval is normally completed in a matter of hours.

Designed in collaboration with development finance lenders, the conversion rate from heads of terms to loan completion is over 90%, with loan completions taking on average six to eight weeks. What’s more, brokers using the platform keep 100% commission on every loan completed.

The platform also supports brokers in the compliance process, storing all search and borrower information in the cloud, evidencing why a particular solution is recommended.

Efficient development finance distribution will potentially save borrowers hundreds of thousands of pounds, which can be used to grow their business and deliver more housing.