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Sponsor’s comment: Bridging the gap to get life back on track

As landlords, businesses and developers race to regain a semblance of normality, bridging could help them in a post-Covid world, says Sundeep Patel of Together

Sundeep Patel, Together
Sundeep Patel, director of sales, Together

After months of disruption, it’s no surprise that the lending market has burst back into life post lockdown.

Whether it’s house purchases, property upgrades or business opportunities, the need to get back on track has driven huge demand in short-term lending particularly, as landlords, businesses and developers race to return to some semblance of normality.

A bridging loan could effectively enable your client to act as a ‘cash’ buyer

In June, Together announced record monthly lending across the business since the first UK lockdown, which included nearly £94m in short-term loans. As this area of the market continues to grow, here are two ways bridging could help your clients in a post-pandemic world:

Supporting landlords with buy-to-let

With rental prices at a record high and demand for staycations skyrocketing, landlords are jumping on the buy-to-let (BTL) bandwagon, snapping up rental properties and holiday lets to cater to a booming market.

These types of client who are thinking long term have a continuous requirement for specialist finance and could potentially offer you repeat business

However, with houses flying off the shelves, a bridging loan could mean the difference between your client scoring a great deal or losing out to another investor who can move faster. If a vendor were prepared to offer a discount for a quick sale, for example, a bridging loan could effectively enable your client to act as a ‘cash’ buyer — and act with speed.

We’re also seeing many investors making use of bridging loans to finance the purchase of distressed properties, refurbishing using cash reserves and then exiting onto a BTL mortgage once they’ve completed renovations.

And, if the work has added significant value to their property, they may end up with a lower loan-to-value than if they’d proceeded with a BTL mortgage from the off, which could secure them a better mortgage deal and lower monthly payments.

Giving developers breathing space

Covid has had a major impact on the building industry, with high demand for trades and shortages of materials meaning developers are facing delays in completing their projects.

A bridging loan could mean the difference between your client scoring a great deal or losing out to another investor who can move faster

If a development is completed later than expected, or sales are taking longer than planned, a bridging loan could support those developers by allowing them to switch to a short-term, lower-cost loan. Either they’ll have up to an additional 12 months to finish the site or they’ll have longer to market their development and won’t be forced into accepting a lower sale price — enabling them to take advantage of increased property prices and make the best possible return.

Opportunities for brokers

While Covid-19 has thrown many challenges in our path, there are plenty of opportunities to be had and bridging loans could be just the product your clients need to grab them.

Many investors are making use of bridging loans to finance the purchase of distressed properties

For brokers specifically, the opportunity goes much further than getting an additional deal on the books. These types of client who are thinking long term, namely landlords and developers, have a continuous requirement for specialist finance and could potentially offer you repeat business for many years to come.

If you’re knowledgeable about a wide range of finance options, and you’re proactive in approaching your clients with a solution to their problems when they need it, it’s more than likely that they’ll want to do business with you time and time again.

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