Automated decisioning models are commonplace in the mainstream mortgage market, but the majority of bridging lending decisions are still made by underwriters.
Whether the ultimate decision is made by a man or a machine, all underwriting processes need data and the big challenge is the collection of this data as it often comes from different sources.
Currently, in the bridging market, lenders will initially provide indicative terms upfront that will usually be a predefined financial product, with pre-defined approval criteria that the borrower will need to meet. These terms can often change once the case has been underwritten.
Without technology, it's very hard for lenders to adjust and change the loan terms and the interest rate online, and in real-time, based on a specific customer and case profile. But this is changing.
Technology can help to streamline the terms and interest rate generation and the underwriting phases of a transaction. When it comes to the indicative terms generation, technology can take a look at a specific case and at a specific profile and tailor-make the terms online based on real-time data collection from the customer.
When it comes to an online decision, the more data an engine has, the more accurate the terms can be and the more the risk can be reduced. Data can include the current portfolio of a property investor, the specific case information that is currently available online and, of course, their credit history data.
Open Banking is changing the market in this area as customers can securely integrate their bank accounts, which can help them to achieve faster terms and a faster underwriting process.
The underwriting process can be further streamlined by integrating ID verification technologies, automatic proof of address and documents verification. By combining these technologies, we can create a new way for
property investors to get their finance in a much more streamlined way, with more accurate terms delivered upfront and smoother underwriting based on up-to-date, accurate information.
At Lendlord, this is exactly our vision, and it’s the reason we have launched a new online bridging lender, which will generate heads of terms, online applications and case tracking as part of a fully digital process.
The really clever thing here is that, by making the lender available through the online portfolio management platform, it tackles one of the big hurdles in the underwriting process – gathering the data.
Lendlord users who manage their portfolios using the platform will be able to quickly review their bridging options based on the data already held on their portfolio – and, as a result of this wealth of information leading to more accurate risk decisions – they will benefit from better terms.
This is actually how the idea to launch a digital bridging lender came about. We received questions from users who asked if they could get better terms from lenders if they keep their data up to date on the platform. We studied existing processes used in bridging underwriting and we realised that an automatic engine could analyse user data and suggest tailor-made product rates based on their profile.
In general, we think the entire property sector is moving more and more online and I can see more bridging lenders moving towards a more automated model that accelerates the bridging process.
