Despite growing demand for regulated bridging loans, we’re still meeting brokers who don’t feel equipped to take full advantage of the enquiries they get for this type of finance.
Here at Clever Lending, we’ve seen a huge increase in regulated bridging enquiries this year and have assisted many brokers to deliver positive outcomes for even more customers.
According to Bridging Trends*, regulated bridging accounted for 43.7% of bridging loans in Q1 2018, with the main reason for bridging finance being mortgage delays at 24%.
Once acquired, a property may also need to be refurbished and this accounted for 18% of all bridging loans.
What is regulated bridging?
A regulated bridging loan is mainly used when a customer wishes to purchase a residential home, although there are many scenarios where a regulated bridging loan can be used.
Examples of when regulated bridging is used include:
- Bridging the gap to purchase if your customer encounters a chain break.
- When longer-term finance is being organised and delays in funds being released.
- Downsizing to a smaller property.
- Delay in sale of current residential home.
- Providing funds for those who want to build their own property.
- To relieve financial distress such as repossession, unpaid tax bills, complex credit issues.
- Auction Purchase.
Also, bear in mind that at the end of the term, which may only be 3 to 12 months, the loan needs to be paid off in full, so it’s important to know from the outset where the money is coming from.
This is known as the exit strategy, and for regulated bridging often comes from the sale of one house to purchase and move into another or refinancing the bridging loan into a conventional residential mortgage.
How brokers can benefit from regulated bridging enquiries
There are two opportunities for brokers to benefit, so this form of finance can help open up new opportunities for the brokerage:
- Assisting customers to arrange the bridging finance to secure their new home.
- Advising on, and arranging, the mortgage that will ultimately be the customer’s primary loan on the property.
Many brokers still feel a little unsure about advising a customer on regulated loans, but specialists such as Clever Lending can assist with this and will look at the best solution for your customers, as well as review products from a wide range of lenders who specialise in this form finance.
Lenders have numerous products available with highly competitive low rates offering plenty of opportunities for brokers to offer a regulated bridging option.
With a growing bridging market and more uses than ever before, it now makes sense to take another look at the opportunities for brokers to provide a regulated solution for their customers.
Turnaround times to complete a bridging loan are quicker than arranging a conventional mortgage and with them being short term it can prove to be more of a cost effective way of securing the property in certain scenarios. There is a myth that bridging is very expensive. This is not always the case