In the midst of uncertain times, opportunities arise, and the world of property transactions is no exception. Despite the chaos, the realm of regulated bridging loans is flourishing, capturing 46% of transactions. It stands as a solution for property acquisitions, breaking free from chains, and streamlining downsizing endeavours. The pillars of reassurance, flexibility, and speed bolster its appeal.
It’s often said that within disorder lies the chance for advancement. This sentiment holds true for the property market. Despite the global and local uncertainties of recent years, the specialty lending sector, specifically bridging loans, has experienced remarkable growth. Figures from Bridging Trends reveal a 64% surge in inquiries during the initial three months of 2023 compared to the last quarter of 2022.
Navigating Challenges through Brief Financing Support
Of particular note is the surge in popularity of regulated bridging loans, constituting 46% of all bridging transactions within this period. As understanding of this sector continues to expand, both brokers and homeowners are recognizing the advantages of utilizing short-term financing to effectively navigate the complexities of property acquisition in today’s economic landscape.
While media reports have highlighted rising interest rates and uncertainties in the housing market, predictions of its demise are overly dramatic. The desire to own property remains strong among consumers, and the need to address residential financing requirements persists.
True, the current mortgage market volatility and the financial pressures stemming from the cost of living predicament pose challenges for those seeking refinancing. However, consumer needs endure regardless of the perceived market conditions.
The Role of Regulated Bridging Loans
In reality, overcoming these hurdles is attainable, with regulated bridging loans emerging as a valuable solution. These loans are increasingly being employed to bridge the gap between property purchase and sale, especially for chain breaks.
In fact, chain break purposes now dominate the reasons for consumers choosing regulated bridging, accounting for 25% of all transactions in Q1 2023, according to Bridging Trends—up from 15% in the previous quarter.
This surge in demand is unsurprising, given that utilizing a bridging loan to break property chains empowers homeowners to swiftly secure funds required to navigate the challenges of chained property sales. This approach enables the outright purchase of a new property before repayment is due upon selling the existing one.
This not only adds certainty to property transactions, mitigating potential costs and delays associated with failed sales, but also prevents the need for underselling the current property to ensure a sale.
Regulated bridging loans also prove advantageous for brokers assisting downsizing clients. These loans facilitate the unlocking of equity from the current home, enabling the purchase of a smaller property without time pressure.
Moreover, they grant clients the freedom to choose when to sell their existing property, avoiding reactionary decisions influenced by an unpredictable economy. This is particularly appealing to those seeking to make informed choices on their terms.
The rapid release of funds further enhances the allure of regulated bridging products within a dynamic market. Applications are often processed within weeks, enabling swift action. In all cases, clients must have a clear exit strategy—typically the sale of their existing property.