Bridgers oiling the residential property market

Bridgers oiling the residential property market



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No longer are bridges the exclusive preserve of professional property investors and landlords, but they increasingly meet the needs of average buyers who urgently need finance.

Yousouf Roze, Director of First 4 Bridging, explains why bridging loans are playing a far more prominent role in the residential property market of late...

Indeed, a number of the cases we have dealt with of late have been a result of a lender either taking too long to make an offer or, even worse, making an offer on a property and then pulling it at the very last minute, leaving the would-be buyer out on a limb.

 

When the high street lender lets borrowers down, the bridging lender will often step in to provide the finance that ensures a buyer is able to proceed with the purchase.

 

In this sense, the bridging sector has really helped oil the residential property market in recent years, making sure sales go through where they would otherwise hit a wall.

 

In a stagnant market with relatively low transaction levels, it’s more important than ever that sales proceed — and bridging finance, which can come to the rescue when a sale is under threat, can go some way to ensure that happens.

 

So what kind of rates are out there and how easy is it to get a bridging loan? Well, on lower loan to value (LTV) loans — generally considered to be those of 60 per cent and below — it’s possible to get rates from as low as 0.75 per cent per month.

 

Admittedly, these kind of rates will probably only be offered on prime properties in the Capital, but they’re still out there.

 

Saying that, rates aren’t that bad at higher LTVs, either. At the time of writing in July, you could get 70 per cent LTV loans around the 1 per cent per month level, which is quite something.

 

In terms of loan criteria, some lenders will be happy to asset-lend at lower LTVs, but once the LTV rises, they will generally start to dig a little deeper to ensure the borrower will be able to service the loan.

 

By and large, though, taking out a bridging loan is by no means as tough as many people think it is. An application form, ID, proof of serviceability and a valuation will generally be enough to kick things off.

 

As you would imagine, each lender has its quirks and preferences. Some, for instance, won’t touch anything if it’s outside the M25, others will focus purely on super-prime properties, while others still prefer to limit their lending to smaller loans. As ever, it all comes down to knowing which lender to go to given the aims and needs of your client.

 

 

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