Brickflow warns lenders gaps can cost borrowers £1m

Brickflow's research found that property developers and investors can lose more than £1 million in borrowing leverage on a single deal if they do not compare lenders. The study covered 300 simulated finance searches across three property lending categories.

It examined bridging loans, commercial mortgages and development finance, using identical borrowing scenarios to measure how widely lender offers vary across the UK market. The results showed large differences in net loan amounts even when the property, borrower profile and deal structure were the same.

Across the full sample, the average gap in net loan size was £250,000 for bridging loans on a £1.4 million purchase, £306,000 for commercial mortgages on a £1.5 million purchase, and £842,000 for development finance on a £3.7 million project with a gross development value of £5.2 million.

One of the widest differences appeared in a development finance case for a residential scheme in Wales. The most competitive lender offered £3,371,262, while the least competitive offered £2,340,936, leaving a gap of £1,030,326 on the same project.

In bridging finance, Brickflow examined a £1.4 million residential purchase in London and found that the highest net loan offer was £979,265, compared with £646,106 from the least competitive lender. The £333,159 difference meant one lender was prepared to advance 52% more than another on the same asset.

A commercial mortgage case involving a £1.5 million retail purchase in north-west England also showed a significant spread. Net loan offers ranged from £1,125,000 to £750,000, a difference of £375,000 that would materially reduce the borrower's deposit requirement if compared with the wider market.

Manual sourcing

The findings highlight a part of fintech and specialist lending where broker relationships and lender panels still play a large role in deal sourcing. The study argues that limiting a search to a small group of lenders can lead borrowers to commit more equity than necessary, reducing the number of projects they can take on.

That effect is more pronounced in development finance, where capital requirements are larger, and projects often run in parallel. In the £3.7 million development scenario, the lowest deposit required by any lender was £450,000, while the highest was £1.4 million for the same deal.

Using that comparison, Brickflow modelled how an investor with £1.4 million of equity could deploy funds under different lending outcomes. With the most competitive terms, that investor could spread the capital across three projects, while with the least competitive terms the full sum would be tied up in one scheme.

Over a longer period, the difference in leverage could reshape the scale of an investor's activity. The report calculated that, if similar funding gaps persisted from one transaction to the next, the contrast could amount to 30 completed projects versus 10 over a career.

Broker focus

Brickflow presents the findings as a case for wider lender comparisons by brokers handling specialist property finance transactions. The company operates a digital marketplace for commercial property finance and says its platform connects brokers and borrowers with more than 160 specialist lenders.

The platform provides live rates, lending criteria and decisions in principle, according to Brickflow. That reflects a broader push across financial services to replace manual search and relationship-led sourcing with systems that can compare a larger set of options for each case.

"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. 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," said Ian Humphreys, Chief Executive Officer of Brickflow, commenting on the results.

The report adds to scrutiny of inefficiencies in specialist property lending, where pricing, loan-to-value limits and credit appetite can differ sharply between lenders. For borrowers, that variation means the cost of a narrow search may be not only a higher rate, but also a lower advance and a larger equity cheque on the same asset.

Among the bridging cases in the dataset, the smallest gap recorded was still £55,000. Pure residential bridging purchases averaged more than £251,000 in net loan differences between the strongest and weakest offers.