The Financial Conduct Authority (FCA) has compiled new data about bridging finance, with some interesting findings.
Firstly, it found that two in five bridging loans (40%) are provided to individuals and companies in London and the South East.
The average bridging loan is for £208,000, whereas the average standard mortgage is £143,000. The average property value where a bridging loan is required is £550,000, whereas the average property value financed by a standard mortgage is £230,000. There is also a significant difference in the type of houses financed, with detached houses accounting for 51% of bridging loan properties, but just 23% of standard mortgaged property.
The average age of someone who applies for a bridging loan is 56, compared to 37 for a standard mortgage, and around a third (31%) of bridging loan applicants are self-employed versus 11% for standard mortgages. Part of this discrepancy could be down to many landlords and developers using bridging loans for property refurbishments, and they tend to be self-employed. Also, many self-employed people use bridging loans to raise short-term capital for their businesses.
Lastly, the research discovered that around 28% of bridging finance customers are retired compared to only 1% of standard mortgage customers.
The data, reported in a MortgageSolutions.co.uk article from September 2017, suggests that the profile of loan finance customers and their borrowing needs is notably different between standard mortgage and bridging loan borrowers. A good finance broker will have the expertise to assist both bridging finance and standard mortgage clients in finding the best loans for their individual needs.