According to the Association of Short Term Lenders, there has been a 500% increase in the number of bridging loan applications over the last four years.
A January 2017 press release appearing at Webwire.com suggests this is probably due to low interest rates, the flexibility of bridging loans and the speed at which funds can become available.
Though many investors and property developers are using bridging loans, there is also considerable interest from individuals. Buy-to-let landlords are also using bridging loans, especially in areas of Britain where house prices are low. The speed at which these loans are often available means that many landlords can secure the purchase of low-cost properties, before they are snapped up by other buyers.
Interest rates can be found for as low as 0.58% a month for bridging loans for a 12 month period, though rates will vary depending on individual circumstances.
While most bridging loans are used for property purposes, a loan can be used for any purpose as long as there is property to secure the loan, and the borrower has a clear plan on when and how the loan will be repaid.
Many bridging loans are used for property purchases at auctions where there is only a small time available to pay the full cost of the purchase. A bridging loan can complete the purchase until more long-term finance is arranged.
Brokers are the best source to find competitive bridging deals, as they can match their clients’ requirements to the best provider and bridging loan.