The UK’s regulated bridging finance market has experienced notable growth, rising to £1.83 billion over the past year. This increase from £1.75 billion highlights a significant trend among owner-occupiers aiming to expedite property transactions amidst ongoing market fluctuations.
What is Bridging Finance?
Bridging finance is a short-term loan option typically used to bridge the gap between the purchase of a new property and the sale of an existing one. Loans are generally available for periods ranging from a few weeks to 12 months and require a clear repayment strategy. This type of finance is particularly beneficial for those needing quick access to funds, such as buyers of inherited properties or those looking to buy out a partner’s interest after a divorce.
Why is Bridging Finance on the Rise?
The recent increase in bridging finance can be attributed to several factors. Many property buyers are seeking to avoid delays caused by lengthy property chains, which can be exacerbated by fluctuating interest rates. As Francesco Amato from Karis Capital points out, bridging loans offer a viable alternative for buyers who need to complete transactions swiftly. This is especially relevant in a market where traditional mortgage options may not be as accessible.
What This Means for Borrowers and Investors
The rise in bridging finance is significant for both borrowers and investors. For borrowers, it provides a flexible solution to secure properties that may not qualify for conventional mortgages due to issues like damage or unfinished work. Investors can also benefit from this trend, as bridging loans can facilitate quicker acquisitions, allowing them to capitalise on opportunities in a competitive market.
Frequently asked questions
What types of properties can be financed with bridging loans?
Bridging loans can be used for various properties, including inherited homes, properties requiring renovation, or those not eligible for traditional mortgages.
How long does it take to secure a bridging loan?
Bridging loans can often be secured quickly, sometimes within a matter of days, depending on the lender and the specifics of the application.