Bridging Loans – New Applications Rise 46% As Rates Fall

Bridging loan applications rose by 46 per cent in July to September 2020, compared to the previous three months, according to specialist bridging lender MT Finance.

Total lending hit £116m during this quarter due to a surge of customers who would normally have taken out mortgage loans at high street lenders.

Bridging loans are a specialist kind of short term loan designed solely to provide a temporary cash flow solution which allows you to “bridge the gap’ before additional permanent finance becomes available.

The method for obtaining a bridging loan is generally straightforward with a more flexible set of criteria than is usually required by most high street banks and mortgage lenders. Like a mortgage, a bridging loan is secured against your property.

Min & Max Loan
£100,000 to £50 million
Max LTV
Up to 80%
Loan Term
1 month to 2 Years
Interest Rates From
0.44% pm

Bridging finance for downsizing/upsizing residential property; Light & heavy refurbishment finance for residential and buy to let property; Finance for unmortgageable properties

Clifton Private Finance are a specialist finance broker working with a wide range of market leading lenders who provide residential and commercial short term finance for property transactions.

Min & Max Loan
£50,000 to £5 million
Max LTV
Up to 80%
Loan Term
1 month to 2 Years
Interest Rates From
0.49% pm

Bridging finance for downsizing/upsizing residential property; Light & heavy refurbishment finance for residential and buy to let property; Finance for unmortgageable properties

If you are looking to finance or refinance a residential or commercial property we can help. We are independent and work with over 60 UK lenders many of whom are specialist lenders not available on the high street. We pride ourselves on providing excellent service responsive to your needs.

Connect for Intermediaries chief executive Liz Syms says slow service from mainstream lenders has persuaded many people to turn to bridging to secure the finance they need.

“Many lenders are taking longer to process applications,” she says.

“Bridging, traditionally used when speed is required, could be considered. However, there are increased costs that need to be taken into account.”

Jonathan Sealey CEO of Hope Capital says ” In a fast-moving market, bridging has offered buyers the chance to act decisively and fend off rival purchasers. The use of bridging finance to purchase properties at auction has also increased since the start of the summer.”

Bridging loan lenders have seen strong demand from landlords who are adding value to their existing buy to let property portfolios.  Finance has been used for increasing rental yield by adding additional bedrooms to properties through light or heavy refurbishments.

MT Finance director Joshua Elash says:

“In these instances, the property professionals want to keep their costs down and thus don’t seek out maximum leverage. They borrow what they need to complete their goal.”

Stamp Duty Deadline

With a stamp duty deadline of 31st March 2021 there is currently a rush to purchase property in the UK and with the mortgage application process taking at least 90 days on a typical home purchase Sealey believes.

“It is highly likely that we will start to see even more people using bridging loans in order to buy the properties they want quickly and take advantage of the stamp duty holiday.”

“This demand will increase while mainstream lenders are unable to meet the needs of borrowers in the timeframes they require, particularly for higher-value properties where the savings could be up to £15,000.”

If you are considering using bridging finance use a regulated specialist finance broker who will as  part of the due diligence will assess whether bridging finance is right for you and the merits of how the loan will be repaid.

For residential purchases this will typically be from the sale of the existing home, and if this is not enough to cover the balance then a standard residential mortgage will be need to be put in place – a decision in principle from a mortgage lender taking into account income and credit history will need to be arranged to ensure that an exit can be facilitated and the long term mortgage is affordable.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Written by Editorial Team ,
19th November 2020