PortfolioBuilder - Your Questions answered
by John Davies, Director.
We've created an exclusive broker-only channel for our flexible bridging solution, justbridging.co.uk, which was launched following the launch of our PortfolioBuilder product at the NACFB Commercial Finance Expo this month.
I was recently interviewed by Bridging and Commercial and here are the questions they asked and my responses about PortfolioBuilder.
We understand you received a lot of feedback on your PortfolioBuilder solution at the recent B&C Awards. What has changed as a result?
We were asked a lot of questions by brokers about the product. Once we explained how it worked the most common questions were: how much commission, can we add fees and is there any form of exclusivity?
It makes good sense to listen to those that are going to provide the business. Therefore, I had a quick get together with the Just Cashflow team and a new strategy took shape before the fizz had disappeared from the champagne bottles.
As a result we have now created an exclusive broker-only channel for our flexible bridging solutions - Just Bridging.
Why is the product generating so much interest?
PortfolioBuilder can provide landlords and property professionals with up to 100% funding due to the fact that we aren't lending purely on the value of property portfolios. Our underwriting decision is based on the property professionals' business model and this is a key difference.
It is important to stress that we aren't bringing out a vanilla 100% LTV product and certainly aren't competing with leading bridging lenders such as Abicus, Dragonfly and Masthaven. I'm not just saying this because I want another invite to Keith Aldridge's birthday party.
The major players are all bound by LTVs of around 70%; which for standard bridging is where it should be. We differ as we are able to provide additional funding because, as noted above, it is the business we are underwriting and the value of properties is only part of the story.
We are a niche player with a different business model and a number of different funding lines that support our proposition, which enables deals to be completed.
We always adopt a very collaborative approach and, subject to the business case, are happy to sit behind other lenders as a subordinated lender.
Just three examples:
- A hotel business was going through a refinancing and needed additional funding to complete the transaction. We looked at this business and the person behind it - in this case a high net worth individual. We were happy to provide £250,000 without the need to register security, which may have caused problems with completion.
- An experienced property developer was in the business of buying and selling properties at auction or below market value but found himself fully committed, again due to LTV limits. He was sitting on over £2M of equity so we were pleased to step in and provide him with a substantial credit line to help him continue to be opportunistic.
- A customer was acquiring a HMO but was short of the 30% deposit required. The broker involved in the deal approached us and we were able to quickly provide the funds needed to complete the deal.
Are you confident that there will be demand for your approach?
Absolutely, we asked Medianett to ask their readers if they had sufficient products to go back to their landlord and property professionals with. Over 65% of those that responded gave a resounding 'No'.
We also calculated that over the last two years the amount of equity in buy to let properties has gone up by a staggering £70bn. Landlords need ways of accessing this without disturbing existing and competitively priced mortgage arrangements.
So yes, we believe there will be demand for this product.
Talk of funding up to 100% understandably makes people nervous so soon after the financial crisis - aren't you worried about this?
I understand where the question is coming from, however, you have to be careful not to compare apples with pears. Property provides the security but our lending decisions are based on the quality of the business.
To date we have funded over 200 businesses and achieved our target of zero capital losses! Our skilled underwriters ask the key questions that establish our funds go to businesses built on firm foundations with the ability to repay.
Will brokers be able to add their fees?
Most certainly and, with the borrower's permission, paid directly to them on completion.
What made you look at Bridging when there are so many lenders in this sector?
We believe we have identified a commercial gap and this was confirmed by Medianett readers. We are already seeing strong demand.
Does your product allow for staged drawdowns?
Absolutely, because this often fits well with a property professional's business model.
You have invested a lot in the Just Cashflow brand so why are you now offering your PortfolioBuilder facility under the justbridging.co.uk name?
I am a great believer in the 'Ronseal' approach of it does what it says on the tin! The justbridging.co.uk name will help Brokers easily identify we offer flexible bridging products.
Date Issued 2 July 2015.
Just Bridging launches PortfolioBuilder
Your flexible bridging solution from £26,000 to £2M for established UK property businesses that own at least one or more commercial properties, which includes buy-to-lets.