03 May 2018

Market is flat, but competition is high. What about a bridging loan?


With well over 11,000 mortgage products on offer throughout the mortgage finance market, competition is fierce.  However, the actual market itself is pretty flat and seems to be taking some time to recover from the two week Easter break!

Lenders are actively looking to assist clients with great product options and despite some longer deals increasing in rates, quite a few have been reduced to try and attract new business.
What we have seen recently are a lot of enquiries to remortgage for home improvements.  Increasing the value in your property can involve large renovation, adding a room or two and a general investment in time and builders.  Or smaller cosmetic changes such as up-grading kitchens, bathrooms, redecorations and so on.  Whether large or small, the investment in property can bring rewards to the value and if you are staying put, reward in the satisfaction of home comfort.  Plus, a potential large saving in stamp duty too, versus moving home!

Whilst rates remain relatively low, and this has become apparent across all sectors of the market including both Bridging and Commercial, the consumer has choice.

Bridging Finance (now also known as short term lending) is money to be used in the short term to facilitate a financial transaction which has either an urgent or short lifespan and which is primarily geared to a property transaction. The most regular type of transactions include: a property being purchased at auction: the purchase of a new property whilst the current one is still being sold - usually when downsizing: acquisition of a property which needs substantial renovation before it is suitable for a traditional mortgage or payment of an unexpected expense whilst more regular finance is being arranged.

There are a myriad of other reasons for which short term lending can be applied and each application is looked at on its own merits before a lender will agree to assist. The best way to look at this is as a means to an end. These lenders will need certainty on the exit route (how will they get their money back?) and they will always insist on an agreement being in place from a traditional mortgage lender to provide a mortgage, at a given time and once any requirements have been fulfilled. So, short term lending is designed to fulfil the need or desire to act quickly. We have seen funds drawn in 48 hours from application! Beware though, this type of lending is not the cheapest and always seek professional advice.

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