Huge Surge in Demand for Bridging Loans

Intense competition within the UK property market has meant there has been a significant increase in the demand for bridging finance. 

As UK home buyers try to get an edge over their rivals, the demand for bridging loans has soared.  

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The stamp duty holiday meant £171.69m more bridging loans were granted in 2021 than in 2020. Lending particularly surged during the third quarter (at £190.24m) as buyers attempted to take advantage of the stamp duty holiday before it ended.

Funding an investment purchase was the most popular reason for borrowers using a bridging loan in 2021. This accounted for 25% of all contributor completions, up from 22% in 2020. Funding a chain-break was the second most popular use (18% of all lending). 

Lack of supply

As a lack of properties on the market continues to fuel hot competition in the market in 2022, bridging finance continues to be an attractive proposition.

Due to the flexible underwriting of bridging finance (previously many bridging lenders didn’t even require income confirmation or credit checks, which they now do), bridging loans were traditionally used to raise money quickly or for short periods of time.

Bridging loans have also historically been popular when funds are required for renovation, expansion and restoration, because many bridging lenders will provide finance secured on property that is in a poor state of repair.

From a simpler application process to quick access to larger sums of money, bridging finance can be a great choice in your property buying journey.

The advantages of bridging loans 

Bridging loan advantages include: 

  • Fast access. You can often access the money in a matter of days rather than months. This effectively turns you into a cash buyer, which is a much more attractive proposition for the seller 
  • Flexible eligibility criteria. A bad credit rating or a history of bankruptcy may not prevent you from getting a bridging loan
  • The option of auction. At auction you are required to pay 10% on the day which, with a bridging loan, is entirely possible
  • Renovation opportunities. A bridging loan can be used to help you buy and renovate an uninhabitable property, to live in, rent out or sell on
  • A straightforward process. Depending on your equity you could access up to £250 million – the loan amount is normally limited to 75% loan to value, which is then secured on the property/properties
  • Less uncertainty. If you’ve had an offer accepted, a bridging loan can put you in a chain-free position, ahead of other buyers

In short, getting a good deal on a bridging loan can make buying your next property much easier and hassle-free!

But if all of this sounds too complicated, don’t worry! While we don’t offer bridging loans, we’ve got to covered with regards to mortgages, especially if you’re a First-Time-Buyer or looking to invest in your first Buy-To-Let.

Mashroom Mortgages offers free mortgage advice, so you can book a call with our experts and find out more about the options available to you.

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