spirit Team big deals

Words by ANDREEA DULGHERU

Following his promotion to head of specialist finance and HNW, OSB Group’s Marc Callaghan discusses how bringing divisions closer benefits staff and brokers

With almost 20 years of experience from numerous roles under his belt, Marc brings significant expertise to his new position. He started his career as a pension administrator for Aviva, after which he became a BDM for Santander, where he worked for over 10 years. In 2014, Marc joined OSB Group (known back then as OneSavings Bank) as a strategic account manager, and was then promoted to national sales manager. After a brief stint away, he returned to OSB Group—which includes lending brands Precise Mortgages, Kent Reliance for Intermediaries and InterBay—in 2022 in a brand new role as group HNW client manager before taking over from Emily Hollands as head of specialist finance.

How exactly will your extensive experience help you in your new position and OSB Group's specialist finance team?

My experience of being in a BDM/national sales manager role with various lenders across different sectors definitely helps and gives value. Obviously, the way a BDM at Santander does the job will be very different from how one in the specialist sector does it, but you get great learnings from working with different finance providers, and you can learn from the good and bad things that other people do. I've pretty much worked in most jobs across the banking process and in the intermediary market, so that brings a bit more value. Also, because I’ve worked across all of OSB Group’s brands—collaborating with our internal colleagues in the risk or real estate functions, for example—I have an understanding of how each part of the product set works, how the bank runs, and how everything is integrated, which helps me provide support where it’s needed.

What have you implemented in the division so far?

We’re really thrilled to have recently launched Select Partners, a new partner proposition which offers exclusive access to our enhanced bridging range, including semi-commercial and commercial bridging. Our select partners were chosen based on their expertise and experience which is so important, especially for this specialist market sector. We also launched a new range of BTL products with a reduced minimum loan amount of £1m, so we’ve got a really strong range of product options out there in the market. With regard to our specialist finance account managers (SFAMs), we’ve already done a realignment of all the regions, just to ensure that we’ve got coverage in the right areas. That was a key focus for me when I came into the new role—to make sure we’re giving brokers across the UK great coverage—and I feel that now we’ve got a really good balance in each geographical area, we’re at a point where none of our teams should have to travel more than two hours to reach an area they cover. In terms of specific areas, we’ve got the South and South-West, Wales, Midlands, the East, the North, and then south, north and central London.

Internally, I really want to work on the connection between my team and the other divisions within the group. I feel there's a massive benefit from working closely with our underwriting functions and administrative teams, so we've spent time building those relationships.

In your opinion, what sets OSB Group’s specialist finance team apart from others?

We have made a name for ourselves in the market for being very good at large deals north of £15m, which aren’t that common. We’ve got some great tools within OSB Group to help us shape these cases. For example, we have a transactional credit committee—made up of the company executives—that our sales team can attend to present a large and complex case to the senior executives and, if it gets voted as being good for us, it will go to underwriting. This is good for my team and their development as they can stand in front of the executives, which you normally wouldn’t do in some banks. Plus, this adds massive value to a broker, because we can do that part of the deal process before the intermediary even submits a full application or spends money on a valuation fee.

We've also got an in-house real estate function, comprising 11 chartered surveyors managed across the whole of OSB Group who have unique experience in the market of all types of assets. We can speak to one of our team members in real estate to gain a full understanding of an asset and whether we feel it's suitable for us. And, again, it's there to add value to a broker, because we may save them and their client £5,000 on a valuation fee or eight weeks’ waiting for a report to come back when we can say a quick yes or no.

We also have a really strong advantage with our SFAMs as they cover both Precise Mortgages and InterBay for our bridging propositions. This allows the team flexibility to offer their brokers and clients the most suitable product for their requirements.

What deal has stood out to you and why ?

We completed a £24.9m loan for the refinancing of 350 student bedrooms across Yorkshire, £20m of which was 10-year interest-only commercial investment funding, fixed for five years. All of the properties were student accommodation units previously mortgaged with us that had been refurbished and finished to a high standard.

The biggest difficulty was the timing requirement from the client, especially for a deal of that size, but we still managed to fund it in less than six weeks, just before Christmas. It was a significant achievement because to do a loan of this size, with a complex structure and a tight deadline, does need work by all parties. So many people were involved to get that deal done—from our admin team, to our internal credit committee, our real estate division, and the underwriters—and it just shows the strength we have within the group.

What are you seeing as the most common uses for bridging finance?

One of the most popular uses for bridging finance is refurbishment—a mixture of light and heavy refurb—coming from landlords looking to buy a property and do either minimal work to tidy it up, or some form of basic conversion to enhance the property. That is still the bread and butter we see day in, day out. We’ve witnessed experienced investors using bridging loans to acquire portfolios from other landlords who are looking to exit the market and want to get rid of five or six properties quickly, and then do a basic refurb and exit onto a term loan.

Demand for development exit loans are still maintained, although not as much because the developer market has been quieter. However, I think we will see an uptick here from 2024.

Why do you think there’s been a rise in bridging loan applications for refurbishment projects?

What we’ve seen more often is investors looking for a high standard of property. A lot of landlords are now understanding the true impact of going for a high-end quality finish on their product and attracting higher rents on the back of it—especially for HMOs, as they can attract a higher yield, which makes a massive difference. Another standard point is the proposed new minimum EPC rating; depending on the level of work that needs to be done, landlords are looking to up their rating as much as they can. I see that as just the norm; if I were acquiring a property today, I’d want to do everything I could within financial reason to get it to as high a rating as possible.

What are the pros and cons of using bridging finance for refurbishment?

If bridging is used correctly, there aren’t any cons. Bridging can help borrowers achieve their desired outcome and get the return they want if they work closely with their broker and know they’re going to exit the loan. I think the cons arise when customers are not advised in the correct manner, or when a client underestimates or overestimates what they’re going to do with their exit. It’s very hard sometimes when a borrower approaches a broker saying they want to do a refurb in three months, but that introducer knows from experience it will take six—but if they tell the client that, they might go elsewhere. As a broker, you have to be firm enough with your clients and explain how they’ll be able to do the refurb. Getting an experienced partner and being realistic of your property’s end value and the timing of the transaction: those are the most important things to be mindful of.

What key questions should brokers be asking bridging lenders and vice versa?

A broker should be asking a lender how they are going to work with their clients during their bridging exit period—so whether they offer an opportunity to exit to a BTL loan after doing the refurb work, or whether the finance provider has other ways of exiting the bridging finance onto a term facility.

As for the other way around, lenders should ask their introducers if they know their market and how the lender works, because each one is different.

How can lenders, brokers and borrowers work together to ensure a successful and painless completion?

For me, communication is everything: between the broker and lender, the client and intermediary, and the borrower and lender, if needed. It’s about the ongoing life management of that bridging loan; if a client knows they're going to overrun, I would rather they pick the phone up with three months to go, rather than on the day it is about to expire. So, for me, the communication element across the whole process—from start to finish, and post-completion to exit—is most important."I feel there's a massive benefit from working closely with our underwriting functions and administrative teams."