Bridging activity increases as mainstream mortgage market fails to do the job
Mortgage introducers have revealed they are writing 51 per cent more bridging business than they were twelve months ago.
Strict lending conditions from mainstream lenders and a shortage of housing in England and Wales are the primary contributors to this boost in bridging business.
Traditionally an adopted funding tool of landlords, property developers and businesses, many owner-occupiers, or homeowners, are also starting to see the potential benefits of bridging as a way around tough rules on lending. This group now accounts for 18.2 per cent of bridging loan customers, an increase of 2.2 per cent in just 10 months.
A bridging loan is often referred to as a short term loan and therefore instantly highlights the clear difference to a standard long-term mortgage. Bridging should never be seen as a long term finance option as it can be an expensive alternative.
There are, however, many situations where bridging could be a valuable funding tool including buying a property in need of refurbishment.
Many homeowners are overcoming both stringent lending and the lack of available properties by turning to bridging lenders to buy dilapidated, inhabitable properties. While clearly not everyone’s cup of tea, this defiant DIY approach is expected to continue to grow in popularity.
Content correct at time of publication