As buy-to-let takes on the new changes to the lending criteria and becomes stricter, one area which is growing is bridging loans.

What are bridging loans?

Often over-looked, and previously regarded as a last resort, bridging loans are short-term secured loans designed to bridge temporary cash shortfalls when purchasing a property.

As mentioned, due to the new changes to Buy-To-Let lending, bridging loans have become more popular due to their greater flexibility, such as no minimum term and no exit fees. It can also be completed a lot faster than mainstream mortgage lending, which is helping to fuel its market growth.

Bridging loans can be arranged in a matter of hours and funds released within 72 hours, but usually, the process is slightly longer and will take a couple of weeks. The term of the loan can be as short as one day usually up to a maximum of 12 months.

Marc Goldberg, commercial CEO of a specialist lender, commented: “We’ve seen strong demand from businesses and investors in this [bridging finance] area, and lent a total of £572.3m of bridging finance in the 12 months to 30 September 2016. Meanwhile, across the group, annual lending topped £1bn for the first time in our 42 year history.”

With regards to cost, short-term finance is always more expensive than longer term lending; but with the increase in lenders providing this service, it is becoming more competitively priced. The loan will also be accompanied by other fees such as legal, surveyor and lenders agreement fee.

If you are interested in becoming a buy-to-let investor, contact us – we are independent financial advisers based in Neath and servicing clients UK-wide.  As independent advisers, we can search the whole of the market to find you the best mortgage deal available or advise you on different routes, such as a bridging loan.