Property developers could lose over £1m in leverage by not comparing lenders, Brickflow finds
On a £1.4m purchase, the average difference in the net loan offered through manual sourcing and a comparison site was £250,000.
Property developers and investors could lose more than £1m in leverage on a single deal by not comparing lenders, according to research by Brickflow.
The report, The UK’s Most Expensive Mistakes, analysed 300 simulated searches covering bridging loans, commercial mortgages and development finance.
It compared responses from different lenders to the same borrowing scenarios.
On a £1.4m purchase, the average difference in the net loan offered through manual sourcing and a comparison site was £250,000.
The gap rose to £306,000 on a £1.5m commercial mortgage purchase and £842,000 on a £3.7m development with a gross-development-value (GDV) of £5.2m.
For a £1.4m residential purchase in London using bridging finance, net loan offers ranged from £646,106 to £979,265.
This was a difference of £333,159.
On a £1.5m retail purchase in the North West, commercial mortgage offers ranged from £750,000 to £1.125m.
For a £3.7m residential development in Wales, with a GDV of £5.2m, loan offers ranged from £2.34m to £3.37m.
This created a difference of £1.03m.
The deposit required for the development ranged from £450,000 to £1.4m.
Brickflow said an investor with £1.4m in equity could fund three projects on the most competitive terms, compared with one on the least competitive terms.
Ian Humphreys (pictured), CEO at Brickflow, said: “Looking at a single lender or a handful of lenders is the industry standard for many borrowers and brokers not using technology.
“The reality is that this manual approach is costly. Borrowers can tie up hundreds of thousands of pounds in unnecessary equity on every deal by sourcing finance manually.
“If that capital were freed up and reinvested, the additional property transactions completed each year could be substantial.”
Humphreys added: “Manual loan sourcing is holding brokers and their clients back.
“We built Brickflow to help brokers close more deals for their clients, with less capital tied up in each one.”
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