It has been revealed that 42% of brokers want higher loan to value (LTV) bridging loans. The Bridging Trends Report for the last quarter of 2107 found that the average LTV was 45%, a decrease from 49.6% in the third quarter of 2017. This has prompted the brokers’ request for higher LTV. It is rare to be able to find LTV loans at over 70%. Brokers want lenders to look at individual cases and consider higher LTV loans where the borrower has substantial assets or the loan will significantly increase the value of the property. Benson Hersch, CEO of the Association of Short Term Lenders is against a general uplifting of LTV levels. He said:
“My personal view is that bridging lenders should not be offering higher LTVs unless there are definite reasons why stretching standard limits could be considered.”
Other lenders have said that offering higher LTV’s could incur higher risks of the borrower being unable to repay the loan within the loan period. It is argued that many borrowers are fine with LTV between 60% and 65%. Lenders that know a borrower well because they have provided finance in the past are prepared to lend more. For example, if a borrower is a developer who has extensive experience of refurbishing properties for a profit, a lender could see a new bridging finance application as low risk, and be prepared to provide finance at a LTV of 85% or more.
