FCA data reveals surprising bridging finance information
The Financial Conduct Authority (FCA) has compiled new data about bridging finance, with some interesting findings.
Firstly, it found that two in five bridging loans (40%) are provided to individuals and companies in London and the South East.
The average bridging loan is for £208,000, whereas the average standard mortgage is £143,000. The average property value where a bridging loan is required is £550,000, whereas the average property value financed by a standard mortgage is £230,000. There is also a significant difference in the type of houses financed, with detached houses accounting for 51% of bridging loan properties, but just 23% of standard mortgaged property.
The average age of someone who applies for a bridging loan is 56, compared to 37 for a standard mortgage, and around a third (31%) of bridging loan applicants are self-employed versus 11% for standard mortgages. Part of this discrepancy could be down to many landlords and developers using bridging loans for property refurbishments, and they tend to be self-employed. Also, many self-employed people use bridging loans to raise short-term capital for their businesses.
Lastly, the research discovered that around 28% of bridging finance customers are retired compared to only 1% of standard mortgage customers.
The data, reported in a MortgageSolutions.co.uk article from September 2017, suggests that the profile of loan finance customers and their borrowing needs is notably different between standard mortgage and bridging loan borrowers. A good finance broker will have the expertise to assist both bridging finance and standard mortgage clients in finding the best loans for their individual needs.