Bridging loans in the current market

The role of bridging loans in the current market


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The role of bridging loans in the current market

Do you know what the top three bridging loan purposes are? Drum roll please… according to Bridging Trends, in third place is bridging for business funding, which nearly doubled from 8% in Q4 2023 to 15% in Q1 2024. The second most popular purpose is chain breaks at 19% (up from 16%). And first place goes to… investment purchases, with a 21% share (down from 24%). No prizes for guessing the top two, but the doubling of bridging for business funding is interesting. This suggests that awareness of bridging finance as a solution among brokers and borrowers for the capital challenges that businesses face is increasing, which is good news for lenders and their advisers active in this space.

What Are Bridging Loans and Why Are They Popular?

Bridging loans are short-term financing solutions. Typically lasting a few months to 12 months, these loans are secured against property assets and are favoured for their speed and flexibility. The key benefits are:

  • Quick turnaround times – this makes bridging loans ideal for developers who need immediate funds. Some deals can be done in days. For example, the quickest bridging loan here at Newmanor that we assisted one of our lender clients with completed in 7 working days. Not bad when the average is 58 days
  • Versatility – bridging loans can be used for purchasing auction properties (9%), light or heavy refurbishments (9%), financing unsold homes, and even for re-bridging to address short-term cash flow issues
  • Less Stringent Requirements – bridging loans often have more flexible credit requirements, focusing more on the property asset’s value, which makes the finance solution more accessible to a broader range of borrowers. Very helpful in a market where lenders are generally tightening criteria and making unsecured business loans harder to obtain

What’s Newmanor’s Experience with Bridging Loans?

Here at Newmanor we recently guided a bridging lender on a short term loan to a borrower who had refurbished a residential property and was looking to release capital from the property to fund the deposit for the next purchase and refurb project. We have worked with numerous bridging lenders and we are actively seeking more bridging lenders who want to work with us.

We are a specialist property finance and commercial property law firm who will plan a clear path to completion and offer solutions that keep bridging lenders on the fast track.

Call or email us now to move away from slow, overly complicated transactions that frustrate your customers and start delivering your bridging loans sooner.