For years, the bridging sector has experienced record growth and a boom in interest from both private and commercial borrowers.
The next 12 months are predicted to be particularly interesting for the industry, as borrowers continue to obtain fewer standard credit facilities and financial products, away from the usual High Street lenders.
Increasingly Competitive Interest Rates
One of the main factors driving the market’s popularity is the increasingly competitive interest rates attached to quality bridging products. Particularly when repaid over a comparatively short period of time, bridging finance can prove significantly more cost-effective than any comparable products.
In some instances, monthly interest rates are as low as 0.5% or less, with the additional bonus of minimal overall borrowing costs.
Combined with the speed and convenience with which a bridging loan can be accessed, this is likely to fuel a further spike in activity in the run up to the looming stamp duty holiday deadline. While there may be insufficient time before March 31 to organise a conventional mortgage, a bridging loan, often accessible within just a few working days, provides potential homebuyers with the opportunity to capitalise on the stamp duty suspension.
As demand for cost-effective bridging loans continues to grow, so too will the competitiveness of the deals available.
Auction Property Purchases
Longer term, experts believe that bridging loans will become an increasingly popular choice among those looking to purchase bargain properties at auction. This applies to commercial investors and private home buyers alike, who in both instances are beginning to warm to the potential benefits of short-term bridging finance.
The bridging sector continues to support homeowners and investors looking to conduct major renovations and home improvements to subsequently sell their properties at the highest possible price. The short-term nature of bridging finance makes it perfect for covering the costs of such ventures, where the customer already has a viable and reliable exit strategy in place.
Bridging finance can also be used to purchase properties below their true market value through conventional channels, enabling movers to purchase properties before the sale of their current home has been finalised.
Economic Damage Control
In addition to the above, it is inevitable that 2021 will see countless businesses seeking temporary financial support to augment costs and complications incurred due to the COVID-19 crisis. With lockdown restrictions expected to remain in place until April at least, it is likely to be some time before most UK businesses can get back to business as usual.
The short-term nature of bridging finance makes it an ideal facility for organisations looking to borrow funds for specific time-critical applications for a comparatively short period of time. Stock purchases, tax payments, payroll and so on – just some of the potential applications for a competitive bridging loan.
Interest in bridging finance has been growing steadily for several years – a trend set to continue throughout 2021 and beyond.