Brian Rubins

Is bridging finance stepping into the mainstream?




Bridging lenders who provide development finance for residential developers undertaking projects with predicted sales of £2m or £3m will consider 65% of estimated sales revenue, according to Alternative Bridging Corporation.

This is equal to 80% to 90% of cost, whereas high street lenders usually do not lend more than 60% of cost, which is far below what is needed.

The lender also believed that active management – such as property repairs or renegotiation of tenancies essential to obtaining a long-term mortgage – is more likely to be readily financed by a bridging lender.

Brian Rubins, director at Alternative Bridging (pictured above), said: “Bridging finance is now an alternative source of funding for commercial loans, where to go when other lenders are not readily accessible.

“Although bridging started life as the short-term fix, today it is anything but."

Alternative has found that borrowers who do not have an established banking relationship find it difficult to create one. 

Irrespective of government support for small businesses, Alternative believed that there seemed to be more reasons not to lend than to do so. 

This problem may be difficult for the business community, but is acute for small property investors and developers.

According to the lender, for new participants and borrowers with smaller requirements, the answer is to turn to bridging finance as an alternative source of finance. 

Brian continued: “Just consider the frequency of borrowers seeking an extension of their bridging loan from six to 12 months or even from 12 to 24 months and how often one bridging finance lender refinances another. 

“This is not a short-term fix, but [a] demonstration of bridging lenders being used as an alternative source of financing.

“The bridging market will finance the purchase and then top up the loan as the value of the security is increased.

“Additionally, long-term finance will be more readily available when the property has been put in apple pie order.

“Alternative lenders are becoming part of the mainstream and brokers and borrowers will start recognising them as a first port of call and not where to go after all else has failed."

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