Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Will Bridging Loans Grow in Demand and Usage in 2019?

Personal_Finance / Debt & Loans Mar 22, 2019 - 05:57 AM GMT

By: Boris_Dzhingarov

Personal_Finance

Bridging loans are often seen as commercial loans to cover a temporary funding shortfall or a delay in funding. They’re also useful for a variety of other situations like a delayed mortgage closing or buying a home at auction too.


The Association of Short-term Lenders shared in a report that UK bridging loans grew by over 20 percent from October 2017 to September 2018. Clearly, property investors, flippers, and redevelopers of older properties are seeing a real benefit with using bridging loans.
Will bridging loans grow in 2019? Let’s consider this now.

How Do Property Investors Use Bridging Loans?

Bridging loans are there to provide short-term financing. They are often used for a loan while waiting for development funds to come through, which allows a developer to move ahead sooner with a property restoration project.  It can also allow for the purchase of properties opportunistically at auction too.

Imagine that you’re selling one property and waiting for the funds to clear. You visit an auction and spot a house that you’re interested in. The problem is that a deposit for the property is 10 percent of the winning bid and there is only four weeks to find the other 90 percent. To get a mortgage in that time, especially on an older property that’s required to clear a property inspection, is next to impossible. In this situation, a bridging loan is an ideal solution.

A website like bridgingloans.co.uk can help locate a suitable lender that will be willing to make such a loan to back the purchase.

Are Property Investors Strictly Buy-to-Let or Opportunistic?

It used to be that UK property investors aimed at the buy-to-let market because it was fairly simple. This left the professional property investors who did it for a living to put their time into the development, restoration, auction purchases, and so on. However, that’s now all changing.

In many property markets, there are too many buy-to-let investors. People have fallen in love with owning rental properties. As a result, the rental yields have come under pressure as property prices have risen. Cash flowing a property, especially one with debt attached to it, is more difficult now.

Extra profits must be found elsewhere to augment returns. For more adventurous private property buyers, they’re seeing fewer bargains in local markets and have increasingly been looking for new opportunities. Because of this, conventional fodder for property companies is now fertile land to plough for investors on the hunt for a bargain to boost their total returns.

Using a Bridging Loan? Know When to Exit

Bridging loans are never supposed to be used as long-term property financing. This isn’t their purpose. That’s what a mortgage is used for. When needing short-term funding for solid properties, plan for the bridging loan you need and where the replacement funding will come from to repay it on time. Doing so avoids paying more than is necessary in finance costs and keeps you on budget too.

As the interest in property investing as a way to diversify away from the stock market continues, investors use bridging loans to cover funding gaps. This way, they can grab that bargain property at auction and know they can secure it before another eager buyer does.

By Boris Dzhingarov

© 2019 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in