Property developers and investors could lose more than £1m in leverage on a single deal by relying on manual loan sourcing rather than comparing lenders across the market, according to research published by Brickflow, which operates a specialist property finance comparison platform.
The report, titled "The UK's Most Expensive Mistakes", analysed 300 simulated finance searches across bridging loans, commercial mortgages, and development finance. Brickflow applied identical borrowing scenarios to multiple UK lenders and compared the resulting loan terms. The findings show wide variation in net loan offers across all three product types and asset classes.
On bridging finance, Brickflow modelled a £1.4m residential purchase in London. The most competitive net loan in that scenario reached £979,265; the least competitive came in at £646,106. The £333,159 gap meant one lender was prepared to advance 52% more than another against the same asset. Across the bridging dataset, the smallest single gap recorded was £55,000, while pure residential purchases averaged a difference of more than £251,000.
For commercial mortgages, a simulated £1.5m retail purchase in the North West produced net loan offers ranging from £1,125,000 down to £750,000. Brickflow calculates that the £375,000 difference translates into a 50% smaller deposit for the borrower who compared the market.
The development finance scenario shows the widest variance. On a £3.7m residential project with a £5.2m GDV in Wales, the most competitive lender advanced £3,371,262 against £2,340,936 from the least competitive, a gap of £1,030,326 on an identical scheme. Brickflow's modelling puts the ROCE differential at 94% in favour of the investor who secured the better terms.
The report also models the long-term compounding effect of that variance. On the same £3.7m scenario, the lowest deposit required by any lender was £450,000; the highest was £1.4m. Starting from equal equity of £1.4m, Brickflow's model shows an investor on the most competitive terms could deploy that capital across three simultaneous projects, while an investor on the least competitive terms would commit it entirely to one. Repeated over a career, the firm suggests that gap represents the difference between 30 completed projects and 10.
"Looking at a single lender or a handful of lenders is the industry standard for many borrowers and brokers not using technology," said Ian Humphreys, chief executive of Brickflow (pictured).
"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."
