We are all, to a greater or lesser extent, creatures of habit. Once we find something that works for us and our clients, we will tend to stick with it. After all, why change a winning formula?
It is particularly true of the lending market. Whilst, of course, we all take a whole of market approach before making a recommendation, records will show that most advisers will choose a solution with which they are already comfortable, if it fits the client’s needs, rather than try a different or unfamiliar lender.
Making a change usually requires a particular incentive, and, in the bridging/short-term lending market, there have been a growing number of concerns that should be worrying advisers.
Concerns over property value and affordability have grown as funders have begun to review their commitments in light of the economic conditions and rising interest rates.
Consequently, the average time taken to complete a deal has been increasing. In part, that is because lenders are becoming more cautious in their lending or are rejecting deals very late and inadvertently forcing the broker to accept worse terms or find a new lender, thus adding to time delays.
Enough there, you might think, for brokers to look at other alternatives. At Suros Capital, we are seeing greater interest in luxury asset lending for the reasons described above.
Naturally, there will be many clients for whom luxury asset lending is not an option, but with conventional short-term bridging finance being increasingly challenged by economic circumstances, advisers should at least be asking their clients about more than income and house value.
Clients are looking to professional advisers for inspiration and are unlikely to have thought of their luxury assets as a means to secure finance.
It is up to advisers to ask questions about other assets that could stand as security. It could very well be the solution to a funding issue.
It might be thought that anyone with a wine collection, classic cars or art and antiques would never be short of funding access.
However, our experience is that many customers do not have the cash available ‘on tap’ at the moment they need it.
Being able to monetise assets to act as security gives clients the confidence to borrow when they need it with a guarantee that as soon as the asset is valued and arrangements been made to make them secure, funding can be advanced more or less immediately without the paper trail rigmarole that traditional lenders must enforce.
We are seeing more borrowers coming to us because of the danger of missing purchase opportunities or repayment deadlines as conventional lenders apply more rigorous checks and speedy completion times are increasingly unlikely.
At Suros Capital, our increasing popularity is based on a very simple proposition with a minimum of paperwork.
Our focus is totally on the value of the asset being offered as security, so completion is only limited by the time it takes to make a valuation. Funding can be completed on the same day.
Therefore, I am delighted to report that our business levels are growing because lending against luxury assets offers an increasingly pragmatic solution as an alternative source of short-term funding for all private and business purposes.
Ray Palmer is a director of Suros Capital
