In the past, few people had heard of bridging finance – and short-term mortgages certainly weren’t something that most people accessed, especially since this has historically been a more expensive form of finance.
But in recent years, the short-term mortgage market has blossomed. Where once this type of loan was the preserve of specialist lenders and niche property deals, a raft of new providers have entered the fray, shaking up traditional views of bridging finance and how it can be used.
Perhaps most interestingly to prospective applicants, increased lender competition means that short-term mortgage rates have dropped – and it’s now possible to access short term lending at a much more appealing price.
In short, bridging finance has gone mainstream. Here are some of the key things to know about bridging finance in 2019, from its uses to the short-term mortgage rates you could expect to achieve.
Short term mortgages: the key figures
Bridging Trends is a quarterly report which compiles data from across the short term mortgage industry. The latest Bridging Trends report shows there was over £184 million of gross lending in Q2 of 2019, of which 81.2% was first charge lending, and 37.5% was regulated.
The average term for bridging finance was 12 months. While this is to be expected, it’s worth noting that it’s possible to secure bridging finance over a longer term – perhaps up to 24 months for unregulated bridging lending – despite the moniker of ‘short-term finance’.*
Meanwhile, the average time to process an application rose from 40 days in Q4 of 2018 to 44 days in the last quarter. This is a trend to keep an eye on, as part of the appeal of short-term mortgages is the ability to arrange them quickly.
Finally, the average monthly short-term mortgage was 0.79%, a fractional increase of 0.05% from the previous quarter.
What is bridging finance used for?
According to the Bridging Trends report, the most common use of bridging loans in Q2 2019 was for investment purposes, accounting for 25% of all short-term lending. This continued the trend from Q1.
One in five bridging loans (18%) were used to prevent a breakdown in a property chain, while 12% were attributed to both heavy refurbishment and business purchases respectively. Other uses included auction purchases, unregulated refinance loans, and regulated refinance loans.
How can bridging finance benefit you?
As is clear from the Bridging Trends report, the bridging finance market is incredibly varied – and also extremely active, with more mainstream uses than ever before.
If you’d like to know more about how bridging finance can help you achieve your goals, download our free guide, Using short-term finance to your advantage.
*Where this article refers to 24 month loans, this is unregulated short term lending.
