Bensen Hersch, the Chief Executive Officer of the Association of Short Term Lenders (ASTL) has said that some financial intermediaries are ignoring the benefits of bridging loans.
In a November 2016 article published at MortgageSolutions.co.uk, he said that some financial intermediaries see bridging loans as the last resort when considering borrowing options. Hersch said that this is a false assumption, adding:
“The primary basis for a bridging loan is to enable the customer to get from A to B – to overcome a temporary financial need until a more permanent solution is found.”
He also said that there is a perception that bridging loans are only used for purchasing property. This is not the case, as there are many reasons for a bridging loan; for example, a temporary cash flow problem can be solved with bridging finance. Alternatively, a property sale may need to be delayed while refurbishment work is undertaken. The refurbishment can be financed using a bridging loan which is repaid when the property is sold.
Another situation where a bridging loan is useful is for making quick purchasing decisions, particularly at property auctions, where it can be used to secure a winning property bid.
Hersch says that bridging loan lenders have become more professional and responsible, and stresses that intermediaries such as brokers and financial advisers should “always consider whether bridging is appropriate in a given situation”.
He emphasises that bridging lenders use skilled underwriters who can assess a loan application and then provide a tailor-made loan, rather than use a ‘one size fits all’ approach.