• The Public Face of Bridging Finance

    The [tag]Bridging Finance[/tag] market is reported to be currently worth about £2 billion per year, which would make it a significant part of the UK property finance market. Despite its size the [tag]Bridging[/tag] market is surprisingly under represented in the mainstream media.

    Bridging Finance is set to continue to be a major component in the overall mortgage market, and in fact some analysts predict that it could be worth over £5 billion by 2010. One of the reasons why Bridging will remain a viable option is because it would appear to be immune to the state of the overall property market. This is because in a rising market there are plenty of property entrepreneurs willing to pay a premium to move property quickly, however in a declining market there are more distressed sales creating the need to “bridge” a shortfall.

    One fascinating aspect of bridging is the role of the mainstream banks, typically they have wanted to keep at arms length from bridging finance. This is because by its very nature a bridging lender has to be willing to step in quickly to repossess a property at the first sign of trouble, something that a bank’s PR department are keen to avoid.

    However, on the occasions that a high-street bank does get involved in [tag]bridging loans[/tag] it is normally in a very tightly controlled environment. What is interesting is that when a property dealer approaches an independent property finance lender they don’t necessarily realise that around 65% of the loan amount is usually sourced from a high-street lender from the wholesale markets. Not that any of this matters, but it is nice little irony.

    The public image of Bridging Finance is changing as more independent lenders get involved, we would like to hear from property developers and entrepreneurs about their experiences of using bridging finance, good and bad.

    Leave a comment below and let us know what you think.