The bridging finance expert, Mark Stephen, interviewed on the website Financial Reporter in September 2017, explained why he thinks that there has been a large increase in the number of bridging loans.
Since 2011, there has been a fivefold increases in bridging lending. During the same period banks have come under increasing pressure from the regulators to tighten up their lending practices. This, Stephen says, has meant that banks increasingly take a long time to process loan applications, making it difficult for property investors to complete time sensitive property deals. They turn to the bridging finance sector because bridging loans can be arranged much more quickly than loans by high street banks.
Some banks are not lending for property development purposes. Bridging loans are available for property developers and are quickly and easily arranged, especially if using an expert bridging finance broker who has a long relationship with specialist bridging finance lenders.
“Those relationships that are founded on a track record of working together to solve issues, will ultimately pave the way for future clients and their funding requirements.”
Traditional mortgages often have strict affordability rules, and a low loan to value (LTV). This means that they are unsuitable for many borrowers. Though bridging loans may have higher interest rates than mortgages, they are useful for people who are unable to meet the lending conditions of large banks.
With the financial uncertainty from the Brexit negotiations, Stephen says that 2017 is a challenging year for financial services.