Difficult-to-obtain lending means bridging applications soar

Stricter affordability rules, stress testing and tighter risk assessments have meant that many lenders are struggling to obtain mainstream commercial mortgages. Marc Da Silva, writing on the website propertyinvestortoday.co.uk in June 2017, said this explains why the demand for bridging loans have risen sharply in the last 12 months.

Bridging loans used to be considered a ‘last resort’ option to raise finance for property purchases. This is no longer the case. A survey by lender mtf found that three quarters of property investors surveyed said they used alternative finance, including bridging loans, in the past year because they found it difficult to obtain a mainstream loan.

The survey found that 44% of investors said that new stricter affordability rules were the main barrier to obtaining mainstream finance. A bad credit rating was the reason that 34% of investors could not borrow from mainstream lenders.

Around 39% of investors reported that they chose bridging finance over other alternative borrowing products.

Buy to let investors are finding it more difficult to run their property businesses. They are faced with paying extra costs including the rise in stamp duty to 3% and the decrease in mortgage interest tax relief. Alternate lenders are servicing the needs of landlords who are also finding it hard to access mainstream lending.

Short term bridging loans can be arranged quickly to help purchase and renovate properties. A bridging loan broker can help borrowers to source the best bridging loans deals.