Bridging the gap

Borrowers who need fast access to funds regularly see their property purchases scuppered by mainstream lenders taking too long to process applications.

With mainstream lenders having to implement stricter affordability testing on residential and buy-to-let (BTL) purchases, it has been harder for borrowers to obtain mortgages, as more stringent underwriting has made the application a more time-consuming process.

This can severely hinder those requiring fast access to funds as many property purchases rely on the ability to secure finance by a set completion date; when mortgage delays hold up the deal, you could end up missing out on an opportunity.

Bridging finance has been able to fill the growing gap between the borrower’s need to access funds swiftly, and mainstream lender’s ability to provide them, gifting borrowers the ability to buy quickly when opportunities arise.

Speed is critically important in bridging finance. It is what makes bridging finance a fundamental tool for those who need to raise funds within a short time-frame. From clinching a fantastic deal to buying at auction within a 28-day timeframe, the need for quick access to finance is clear and bridging loans have always been there for those property investors to fill a liquidity gap.

Whereas a mainstream bank can take several months to agree a loan in a process that can be stressful as well as time-consuming, a bridging finance lender is often able to make lending decisions within hours of initial enquiry and release funds in less than a week, preventing borrowers from missing out on time-sensitive opportunities that come their way.

For example, we recently helped a client who required funds to complete the purchase of a commercial property, which he planned to convert into a house of multiple occupation (HMO). The vendor had set a specific timescale for completion, therefore the client needed to act quickly in order to capitalise on this valuable opportunity.

MT Finance provided a first charge loan of £960,000 at 59% LTV, seven days before the client’s deadline. Interest was retained at 0.79% per month, over a 12-month term. Our bridging loan meant the client was able to purchase the property before the set deadline.

With highly professional specialist lenders offering flexible products at competitive rates, bridging finance has become an attractive proposition to those who need certainty when conducting their property purchases and who may need to move swiftly in order to capitalise on an opportunity.

So, whether you have been let down by your mortgage lender at the last minute and need to exchange/complete on your purchase, or your lender is taking too long to agree your mortgage and you need to exchange to secure the property, a bridging loan could provide a solution.

The property world moves fast, particularly when it comes to investment properties, and fast funding is increasingly crucial when pitted against an ever-slowing mortgage environment. For more information on how a bridging loan could help you purchase a buy-to-let property, call us on 0203 051 2331 or fill in our contact form and a member of the team will contact you shortly to discuss your requirements.