Good reasons for continued bridging finance growth

As recent figures from Association of Short Term Lenders (ASTL) fill the industry with confidence, Richard Tugwell, intermediary relationship director at specialist lender Together, discusses the current trends and the continuing popularity of bridging finance.

Record numbers of short-term loans were written in the last financial year – with the annual figure breaking the £3 billion target for the first time, according to industry experts. Data published by the Association of Short Term Lenders showed that the market continues to gather pace with a hike of more than 7% in the year to June 2016. The second quarter alone saw a record high of £875 million written, a 12.1% increase when compared to the first quarter of the year, showing the continuing strength of bridging finance lending.

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Market-leading products

Here at Together, we’re proud to be a leading provider of bridging finance and are continually improving our products and processes to ensure we remain at the forefront of the market.

We’ve enhanced our systems, namely our broker portal My Broker Venue, which has seen the bridging application time for a broker slashed from 30 minutes to just two, whilst a quote can be generated in just 60 seconds.

As well as ensuring a time saving, we’ve also improved the user experience, with features such as a dedicated ‘commercial bridge’ section for ease of access, all non-value added fields have been removed, and changes to documentation provide forms that can be easily printed or emailed for client copies. These new features will save brokers significant time, whilst also ensuring their clients can enjoy an even faster service.

In line with the improvements to our systems, we have also launched a refreshed bridging product range for brokers. The loans available are tiered by loan purpose, amount and loan to value, and exit fees on residential lending over £100,000 have been removed.

In June, we also launched our lowest regulated bridging rate at just 0.49% per month. The limited edition product is our lowest ever published bridging rate in our 43-year history and is currently the lowest in the market at up to 50% loan to value.

The rate is available for loans up to £2.5 million, with larger applications considered on an individual basis, with no maximum age limit.

Bridging in practice

Recently, we provided three regulated bridging loans worth more than £3.7 million in just three days.

Two of the first charge loans – for £1.4 million and £831,300 – were funded on the same day and another, for £1.5 million, three days later.

We reviewed each case and provided the funding last month, following the launch of our lowest ever regulated bridging rate.

The first clients applied for a regulated bridging loan, secured against their £3.25 million home to repay an existing bridge and raise funds for their business. They plan to sell the property, in Gloucestershire, to repay the loan and downsize.

The second customers, from Surrey, took out the bridge to clear their existing mortgage with a mainstream lender, before using the proceeds of selling their £1.3 million property to exit the bridge and move to a smaller home.

We then provided the third loan for £1,530,000 for a customer in Cambridge to clear part of his cross-charge bridge for £4.6 million.

These are excellent examples of the benefits of bridging finance, and the success that comes from working in partnership with a trusted broker to get the best outcome for the customers.

The broker contacted us because they know our track record of turning around funding quickly, providing a service in a timescale that many mainstream lenders simply wouldn’t be able to match. They came to us with three well-presented applications, making the process as quick as possible, and we were delighted to provide the fast and flexible short-term funding needed to help their customers realise their plans.

Looking forward

These are just a few examples but it’s easy to see why bridging is such a popular choice and why the ASTL are seeing the growth that they have reported.

As more lenders enter the bridging market, it’s important to know where to turn and the feedback we have from those we work with is that the two most important factors are speed and service.

When bridging applications are against tight timescales, our team will work round the clock to help ensure the best outcome for the customer.

Our experience in this sector, which spans 43 years, enables us to accurately assess each case and make quick decisions, whilst our underwriting teams can look into any complexities using their extensive experience.

In 2016 we lent £626.4 million of bridging finance and we hope to exceed that this year in light of the robust demand we’re seeing.

Our common sense approach is what sets us apart, and as we look to the future of bridging, we would agree with the ASTL that the outlook is positive.

We will be continuing to improve and extend our offering, ensuring that we are meeting brokers’ needs and responding to changes in the market, to ensure we maintain our position as a trusted and recognised leader in the field of bridging finance.

5 things you may not know about bridging finance

  1. It’s not just for property! Whilst the most common use has historically been to repair broken chains or purchase property quickly, bridging finance is increasingly being used to raise capital for a whole range of purposes
  2. It can be longer than 12 months… There’s a perception that the maximum term is 12 months – in fact we can offer terms of up to 24, although many exit in much less
  3. It’s flexible – when it comes to the interest, you can pay it monthly or roll it up
  4. There are many exit strategies that lenders will accept – these could include refinancing following refurbishment, a pending property sale and proceeds of probate. Together will also accept a combination of sale and remortgage where customers use more than one property as security
  5. Some lenders, including Together, will allow you to cross charge on two or more properties, to take advantage of the total equity and borrow a larger amount