For Bridging Loan Customers, it’s All About Speed.
If you already know bridging loans, you’ll be well aware of their unique properties and potential advantages. If you’re new to the subject, you’ll be hearing a lot more about bridging finance over the months and years to come.
The last couple of years have brought about an enormous influx in bridging finance activity across the UK. Everyday consumers and commercial borrowers are turning to bridging finance as a convenient and accessible alternative to more traditional loan products.
As a specialist type of secured loan or mortgage, bridging finance can be used to reduce total costs due to its short-term nature. Bridging loans are popular among property developers and investors, who often need to take advantage of property purchase opportunities as quickly as possible.
Hence, it’s no surprise to learn that ‘speed to completion’ has been named the number-one point of appeal among bridging loan customers. In fact, the results of a recent poll suggests that a full 44% of bridging borrowers apply for bridging finance for the speed of the transaction alone.
By contrast, less than 20% indicated that their priority was low interest rates, while the speed of the initial decision was prioritised by a mere 4% of applicants.
United Trust Bank - the specialist lender that carried out the survey - noted an interesting turnaround in traditional transaction processing times.
“It’s interesting that although a majority of brokers indicated that a quick completion is the most important factor for borrowers when placing a deal, in reality UTB are often the party waiting for the customer to trigger the drawdown of the loan. Lately we’ve noticed that the time between initial proposal and drawdown is now greater than it has been for a long time, and it’s the customers who are setting the slower pace, not the lender,” said Gavin Diamond, commercial director for bridging at United Trust Bank.
“The fact that the speed of the initial decision ranked near the bottom of the list of borrower priorities also contradicts our experience. In most instances the broker and the borrower want a quick decision and the assurance of an offer letter to enable the clients to move on with confidence. After that, the request for funding is often delayed."
The Benefits of Bridging Finance.
Bridging finance exists to provide private and commercial borrowers with quick and flexible access to sizeable funds, when time is a factor and when other forms of traditional finance are not available. Essentially, a bridging loan addresses all (or most) of the potential issues associated with traditional High Street loans.
For example, it isn’t always necessary to have a good credit score to qualify for a bridging loan. In this instance, the equity remaining in the property following drawdown of the loan is the priority.
In addition, the underwriting process with bridging finance can be significantly quicker and easier than traditional forms of high street loans. In certain circumstances, from the date of the application, the funds required can be made available within a matter of days.
Depending on the lender, there are also minimal restrictions with regard to what a bridging loan can be used for provided the use is legal. After the loan has been issued, the balance is repaid in the form of a lump-sum payment on an agreed date, usually no more than twelve months later. Often no early repayment penalties are imposed, so overall borrowing costs can be kept to absolute minimum.
With such an extensive list of benefits, it’s interesting to learn that speed to completion remains the number-one priority among most bridging finance customers.
If you would like to talk to talk directly to the lender that supplied this information visit https://www.ukpropertyfinance.co.uk or call 0333 322 55 44.
UK Property Finance - 2C, Kibworth Harcourt, Kibworth Business Park, 2 Harborough Rd, Leicester, LE8 0EX.