The rise of bridging loan lending
Bridging loans are on the up, at the same time as traditional mortgage approvals are down. Latest figures from the Association of Short Term Lenders’ (ASTL) show that there has been an 83% rise in bridging loan applications during the first part of this year, compared with those of 2013.
The reasons for this are varied. A relaxation in the planning laws has led to more developers converting office space to residential premises, as housing demand remains high. Increased consumer confidence is also thought to be driving demand, and churn rate, in which bridging loans are refinanced by another lender have also been popular. The enduring appeal of the bridging loan can also be explained by the flexibility of these loans to plug any gaps in finance, especially where property completions are concerned.
So what are the other key advantages to bridging loans? Speed of approval and arrangement are one of the chief benefits, and with the ability to borrow without having to endure ‘stress tests’ then bridging finance represents a clear advantage to borrowers. And if you’re keen to make the most of the booming property market, then a bridging lender will make development finance available to you for properties that commercial mortgage lenders won’t ordinarily cover. Bridging finance is also increasingly being used for land acquisitions where planning is required before development can start.
So as the property market continues to flourish, and bridging finance becomes ever more competitive, investors and developers are enjoying the rewards of these loans.
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