Bridging finance, often seen as a short-term funding solution, is gaining traction for its ability to help buyers quickly secure funds, particularly in situations where traditional loans may not be the best fit. These loans are typically secured against property and are invaluable in scenarios such as property refurbishment or preventing a break in a property chain.

The Importance of Valuations

A critical aspect of securing a bridging loan is the property valuation, conducted by professionals from the Royal Institution of Chartered Surveyors (RICS). Accurate valuations are crucial, especially for properties that are in disrepair or have structural issues, as these factors significantly influence the amount a lender is willing to offer.

The Auction Attraction

One driver of the bridging finance boom is the allure of property auctions, where investors often find themselves in need of swift financial solutions to seize bargains. With auction sales reaching record highs, the bridging sector has emerged as a go-to resource. Auction House, the UK’s premier property auctioneer, reported a staggering 22% increase in sales in 2023, selling more properties than ever in its history.

Trends and Data Insights

Bridging finance isn’t just about facilitating quick purchases; it’s also playing a pivotal role in investment strategies. According to MT Finance’s Bridging Trends data, there’s a consistent demand for bridging loans, particularly for auction purchases and investment property acquisitions. The sector witnessed record lending levels towards the end of 2023, with the Association of Short Term Lenders reporting a historical high in loan volumes.

Looking Ahead

The trajectory of bridging finance is on an upward curve, with expectations for continued growth, especially among buy-to-let investors seeking to maximise returns. The integration of bridging finance into more brokers’ portfolios highlights its increasing significance and potential for both clients and the industry at large.