Bridging loans have risen in popularity since the financial crash 10 years ago, with banks tightening criteria and becoming focused on tickboxes to help them decide whether people qualify for finance. With the rise of buy-to-let mortgages, small business, the self-employed, who don’t necessarily tick all boxes the high street ask of them, there was a need for more flexibility from lenders. Short term finance particularly has grown in popularity and can be used for varying purposes. Some of which are included below:
Capital raising – raising finance for residential and commercial purchase (against a property by a first and second charge)
Buying property at auction
Landlords looking to buy property to expand their portfolio
Property refurbishment and development projects
Cash flow (for example second charge business loans)
Meeting tight deadlines for example to pay a tax bill
Assisting with legal matters
Short term lease extensions
Re-bridging a bridge
In Q3 2020* the top purposes of a Bridging loan were for:
22% investment property purposes
17% for chainbreak
13% for heavy refurbishment
10% business purposes
At SoMo we are seeing very similar, with the top purpose being for cash injection into a small business. Take the example below:
A 68% Second Charge Bridging loan was locked in for James.
He was looking to expand his property portfolio and needed to raise funds on his home.
Our solution:
Our team helped by funding a £800k Bridging loan. The loan was secured by way of a second charge at a market leading 68% of the open market value, funded in 16 days.
SoMo can help lend:
- Against the Open Market Value, for first and second charge purposes.
- On all sorts of non-standard property types.
- To various types of people, including limited companies, ex-pats, self-employed, people with blips in their credit and many more.
*Bridging trends, Q3 2020
Categories: Borrower News, Broker News, Investor News
