The growing popularity of the bridging market over the past few years means there are now more lenders and a greater choice of products to choose from than ever before.
Although the exact number of lenders in the market remains unknown, it is widely estimated that there are anywhere between 200 and 400 different types of regulated and non-regulated players currently operating in the bridging market.
Challenging economic conditions and increased global and domestic uncertainty have helped to drive the market’s growth, with brokers and borrowers becoming increasingly aware of the multiple range of uses that bridging finance can offer and using the product more frequently to address their capital raising needs.
Competition among lenders and relatively stable interest rates have also helped to maintain demand for products, a trend that looks set to continue over the next five years.
According to figures released by the Bridging and Development Lenders Association (BDLA), completions grew to a record £1.74bn in Q2 2024, a 15% increase on Q1.
The figures are in line with Mintel’s ‘UK Bridging Loans Market Report 2024’, which expects the value of the sector to reach £10.9bn by the end of 2024 and grow 25% by the year 2029.
One of the most appealing aspects of the bridging market is that it is a quick and flexible financing solution for every type of borrower, whether they are a residential buyer, or a property investor or developer.
For example, for property developers or borrowers looking to move quickly and buy a property at auction, add to their existing portfolio or carry out renovations, a bridging loan can be a useful tool for quickly raising capital. The equity can also be used for cash flow purposes or to pay a tax bill.
For the everyday consumer, a bridging loan can also prove to be the difference between a successful and non-successful property purchase, particularly in a slow-moving housing sector, where completion times are lagging and property chains are at risk of collapsing.
By taking out a bridging loan to secure a property and repay the loan when an existing house is sold, the borrower can safeguard the property they want and avoid missing out on a purchase.
This can also prove an effective tool for those borrowers looking to downsize by allowing them to purchase another house before their current one is sold.
All borrowers taking out a bridging loan will also need to ensure they have an exit strategy and a means to repay the loan, which in most cases, will probably be the sale of their existing property.
This is an integral component of taking out a bridging loan and needs to be clearly outlined with as much detail as possible during the application process.
While the market’s evolution and growth are very much welcome, staying on top of new entrants, product offerings and market developments can be difficult, particularly for those brokers not fully immersed in the sector.
It is here that enlisting the help of specialist broker and packager can help brokers find the best solutions for their clients.
Norton Broker Services has 50 years’ experience working in the specialist mortgage market, which means we have the expertise and knowledge needed to ensure your clients get the advice and solutions they need.
Our longstanding relationships also mean we are well versed in navigating market fluctuations and changes, which enables us to be one step ahead of the competition in terms of securing the best deals and exclusive rates for clients. This can prove particularly advantageous in cases where a swift turnaround time is required.
For those unfamiliar with bridging finance, we understand that this area of the specialist lending market can be daunting, which is why referring the client to us can help.
Any broker choosing to do this will always be remunerated and will continue to receive a commission in years to come when, and if, the client returns.
Not only is this an excellent form of passive income, it also means the referring broker can focus on helping those clients with more simple and straightforward mortgage applications while we help them address the specialist lending cases of their more complex borrowing clients.
This can stand them in good stead for navigating market challenges while continuing to meet the needs of their existing clients.
Dan Jones is bridging and commercial sales manager at Norton Broker Services
