The UK’s bridging finance industry is estimated to be worth in excess of £4 million, Calculator reports. This type of specialist and non-bank lending has gained significant traction in recent years as a way to complete on a property under a short deadline.

With over 50 established lenders and 200 brokers, the industry employees over 1,000 people across the UK, Scotland and Wales.

Worth less than £1 billion in 2011, the role of restrictive mortgage lending from banks and the ability of firms to complete deals under a tight deadline has seen the industry grow significantly, especially in areas such as residential and commercial development and buy-to-let.

What is bridging?

Bridging finance or bridging loans are a type of finance that allows you to ‘bridge a gap’ between the purchase and sale of a property. For those that cannot get a mortgage or are looking to complete on a property in a short timeframe, bridging finance can often provide funds within 2 to 4 weeks, helping you to complete sooner rather than later.

The most common purposes are for property developers looking to complete on a buy-to-let and looking to avoid property chains. On a homeowner level, people can buy a new house using bridging, before they have sold their initial one.

With loan terms running from 3 to 24 months, you are expected to pay back the entire loan in full by the end of the term, or you can refinance with another lender under different terms.

Why is there a demand for bridging in the UK? 

The rise of bridging came following the credit crisis of 2008 when banks were very strict with whom they lent to. At this point, investors and homeowners were looking for alternative ways to buy properties – and bridging quickly started to emerge as a solution.

In addition, a common reason why property deals fall through is due to property chains and people backing out of deals along the chain – but with no mortgages in place, bridging is an effective way to avoid this.

Benson Hersch, CEO of the ASTL, explains: “In September 2011 annual bridging completions were worth only £474million, but the most recent data set to be completed by ASTL members in late 2017 showed that annual completions were worth £2.8billion. Our estimate is that these figures cover only circa 65% of the market, so the actual size of the UK bridging market is more likely to well in excess of £4 billion.”

How many bridging loan providers are there in the UK?

There are approximately 50 bridging lenders in the UK, with teams ranging from a handful of people to several hundred. Some lenders such as Precise Mortgages and Masthaven are classed as ‘challenger banks’ and their propositions expand way beyond just bridging to other financial products and mortgages.

There are over 200 brokers in the UK offering bridging finance as a product, with many doubling up with other financial services across mortgage, price comparison and business loans.

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