At a time when the mainstream market is in turmoil, bridging has come to the fore as an alternative avenue to help those either facing financial difficulty, or who still want to invest in property.
With this in mind, The Intermediary spoke with Jade Keval at Somo about how the business has evolved over time to support brokers and borrowers.
Can you introduce yourself and Somo for our readers?
I’ve been with Somo for a fairly long time, just over seven years. This year the company will celebrate our 10-year anniversary so, I’ve been here more or less since the start, when there were four or five employees.
Previous to Somo, I was a business development manager (BDM) for another bridging company, as well as a few other roles in bridging, and before that, I worked in high street banks.
In the very early days at Somo, there were only a few of us, and we’ve built up to more than 80 members of staff across the Social Money group.
How has the business changed in the 10 years since Somo launched?
When I first started in finance, bridging was a bit of a dirty word – it was seen as really expensive finance, and it wasn’t a mainstream thing. The only people who used bridging finance were in dire straits at that time, which is very different compared with now.
The business has changed, not just through the people that we’ve got, but we’ve become a specialist in what we do. There are so many bridging lenders in the market, and obviously, we’re slightly different anyway, because of the way we’re funded by investors.
Although we offer both first and second charge loans, we have become synonymous with second charge bridging, underwriting and understanding those types of deals to not only make sure they’re safe for the client – the person that’s borrowing from us – but also for our investors and for the company.
Our second charge product became really strong for us during lockdown, when a lot of lenders were pushing lending down, especially in the first few months. We did really well, in fact we had two record years during that time, and I think it was our second charge product that did that for us, because there were so many people that needed to use the equity they had in their properties. That product really put us at the forefront, because the product was perfect for what people needed at the time, which was cash.
From being a dirty word to an important tool, what have been some of the most interesting shifts you’ve seen in this market?
For the people that come to us with deals now, bridging finance isn’t a dirty word – real people use it, there’s a place for it in the market, and it’s part and parcel of specialist finance now.
A lot of the time it’s because somebody is in trouble or struggling, they need the money for a short period of time, or it’s something the banks don’t have an appetite for, which fits perfectly with bridging. So, from it being something that was very expensive and really only a last resort, more and more property investors and portfolio landlords are using it day in, day out. They just want that quick flow of cash, and it’s become more acceptable to use it as part of your day in, day out.
Have the problems of the past year or so helped build up the specialist market’s reputation?
Absolutely! I don’t think we’ll be going backwards. Both Covid-19 and, before it, the first recession, set bridging up. We were here to pick up the pieces and help people that were struggling.
We’re always going to be there as a viable route when the mainstream banks don’t want to lend, for whatever reason. So, whether times are bad or not, there’s always going to be clients that don’t quite fit the mould straight away and need a bridge.
One of the more positive uses of bridging is refurbishment – what would you want to get across to brokers about this side of the market?
We’re all aware of what’s going on – there’s a housing shortage. We’re seeing more and more clients with commercial or semi-commercial properties that are refurbishing them to be residential.
We set up our refurbishment product about two years ago, and it’s been growing ever since, even with brokers who aren’t necessarily development brokers. People have these assets that are sitting empty, and they want to convert them under permitted development rights (PDR), where they can do that without getting the planning permission.
There’s so many empty units and empty commercial premises that are being converted for that very reason.
More and more businesses are going online and don’t need physical space any more, so those buildings are empty, and can be quite easily converted – buildings that were once shops and retail units, that are now becoming flats, apartments or houses.
Looking at the business, what makes Somo stand out in terms of how it handles relationships with brokers?
One of the biggest things I advocate within the sales team is that we’ve got a very personal relationship with brokers. We don’t have online portals. We don’t make them go away and sign loads of forms. It’s very much a personal relationship with anybody that we deal with.
Considering a deal is never going to be a tick-box exercise. We don’t want to be a lender that runs like that. We want to be able to look at every deal on a case by case basis. We give our team the freedom to be able to write the business there and then. They can give a very quick ‘yes’, but are also able to give a quick ‘no’ to brokers, explain why their deal is not one for us, so they can place it with the right lender.
Are there any big developments on the horizon for the next year that brokers should be looking out for?
We had some big moves in 2023, releasing a few different products and making a big push on second charges, as well as something called a ‘lifeline loan’, which is very specific to clients that are facing bankruptcies.
We have two specialists in the office that just deal with those types of loans, an underwriter and a relationship director. We’re trying to help people that have got the assets, and we can help them come back out of there and buy themselves a bit more time.
That’s something we’re going to be having a big push on this year – as well as to continuing to be a trailblazer in second charge loans.