How the credit crunch 10 years ago affected bridging finance
It’s now a full decade since the credit crunch led large lenders to become more cautious, and this provided opportunities for bridging finance lenders.
After 2008, many companies and individuals found it more difficult to obtain a loan. Bridging finance lenders had more flexible lending criteria and could often provide short-term finance during delays in arranging long-term loans. Many finance lenders operated in niche markets such as property auction finance.
Bridging loans transformed from ”loans of last resort” to being more mainstream. In 2017, there are many specialist lenders and competition is fierce, which has resulted in low monthly interest rates on bridging loans. Interest rates vary, but most loans are available at less than 1% per month.
Many lenders are regulated by the Financial Conduct Authority to protect borrowers. The main reason for bridging loans is for completing houses sales when mortgage applications have been delayed, but bridging finance is flexible and there is an increasing number of reasons for using it, including buying property at auction and for businesses needing short-term capital. Bridging loans have also been used to pay inheritance tax when there is a delay in selling estate assets,
A bridging finance broker has a wide knowledge of the bridging finance sector and will have relationships with many lenders. This means that they will be able to find the best deal for borrowers. A bridging finance broker can help borrowers supply accurate documentation to support a loan.